Moody’s rates GCX notes B2

Moody's Investors Service said it assigned a provisional B2 corporate family rating to GCX Ltd. and a provisional B2 rating to its proposed dollar-denominated senior secured guaranteed notes. The outlook is stable.

GCX is a wholly owned subsidiary of Reliance Communications Ltd. through an intermediary holding company, Global Cloud Xchange Ltd.

The bond proceeds will be used to repay the $250 million balance of shareholder loans availed from Reliance and its subsidiaries to GCX and for capital expenditure and general corporate purposes. Reliance will use the money received to reduce debt at subsidiary Reliance Globalcom BV.

The agency said GCX's provisional B2 rating reflects its position as one of the largest privately owned submarine cable network operators globally, which enables it to benefit from ongoing growth in global internet traffic, particularly in the emerging market corridor in areas such as India and the Middle East.

Notwithstanding this, GCX remains exposed to an intensely competitive and highly fragmented operating environment that suffers from chronic over-capacity resulting in declining price levels and that will continue to pressure the company’s operating performance over the next two to three years at least, Moody’s said.

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