Moody’s: 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.

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

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

Virgin Australia’s strong shareholder base and its willingness to offer financial support in challenging times have historically provided additional support to the company’s ratings and increased the rating tolerance for the current weak credit metrics, Moody’s added.

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