Moody’s revises Zayo view to stable

Moody's Investors Service said it changed the outlook for Zayo Group LLC to stable from positive following the company's announcement of an agreement to acquire Electric Lightwave (formerly Integra Telecom Inc.; B3 stable) for $1.4 billion in cash.

The agency also affirmed Zayo's B2 corporate family rating, B2-PD probability of default rating, B3 (LGD5) unsecured debt rating and Ba2 (LGD2) senior secured debt rating.

The speculative grade liquidity rating was revised to SGL-2 from SGL-1 based on the company’s persistent high capex and minimal free cash flow.

Zayo currently has a term loan commitment to finance the transaction, but Moody's said it assumed that the permanent financing mix will be in line with the current proportion of secured and unsecured debt in the capital structure. Any shift in the mix of secured and unsecured in the capital structure could result in a change to the B3 unsecured and Ba2 secured ratings.

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