Moody’s applies B1 to KIO notes

Moody's Investors Service said it assigned a B1 rating to the new up to $300 million senior unsecured notes that SixSigma Networks Mexico, SA de CV (KIO) is proposing to issue.

The B1 rating is in line with the company's B1 corporate family rating.

The outlook is stable.

Proceeds would be used to redeem KIO's existing $230 million senior unsecured notes, pay expenses related to the notes issuance and existing notes redemption, and general corporate purposes.

Moody’s said the B1 corporate family rating reflects the company’s revenue concentration in Mexico, with a particularly large exposure to the Mexican government (about 60% of revenue), and its sensitivity to the Mexican peso depreciation.

Additionally, the B1 rating considers industry risks, such as strong competition and relatively high capital intensity which constrain free cash flow generation, and the weak operating margins, most recently affected by the sale of its higher-margin fiber-optic business, the agency explained.

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