Moody’s puts Virgin Australia on downgrade review

Moody’s Investors Service said it placed the B2 corporate family rating and B3 senior unsecured rating of Virgin Australia Holdings Ltd. on review for downgrade.

Moody’s also said it placed on review for downgrade the ratings assigned to Virgin Australia 2013-1A Trust, Virgin Australia 2013-1B Trust, Virgin Australia 2013-1C Trust and Virgin Australia 2013-1D Trust.

The downgrade review reflects the uncertainty that emerged about the outcome of Virgin Australia’s capital-structure review and the level of shareholder support given news that Air New Zealand is exploring options with respect to its shareholding in Virgin Australia, including a possible sale of all or part of its about 26% stake, Moody’s said.

The review also considers the slower-than-expected momentum now evident in the de-leveraging of the business and the deterioration in its liquidity profile, the agency said.

The company’s adjusted debt-to-EBITDA ratio for the 12 months that ended Dec. 31 was 7.2x, a level that exceeds the tolerance of 6.5x for its B2 corporate family rating, Moody’s added.

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