Moody’s ups Nexstar, notes; rates Marshall loan Ba2

Moody's Investors Service said it upgraded the corporate family rating of Nexstar Broadcasting, Inc. to B1 from B2 and the rating on its senior unsecured notes to B3 from Caa1.

The outlook was changed to stable from positive and the SGL-2 speculative grade liquidity rating was affirmed.

Moody's also withdrew all ratings on Rocky Creek Communications, Inc. and assigned a Ba2 rating to the first-lien bank credit facility of Marshall Broadcasting Group, Inc. ($60 million term loan and $2 million revolver). Nexstar and Marshall facilities are cross-collateralized and cross-guaranteed and have cross default provisions, and the Marshall debt will help fund pending acquisitions.

The upgrade incorporates expectations for Nexstar's leverage to fall below 5 times debt-to-EBITDA (on a two year average basis, pro forma for all acquisitions) over the next year, as well as the benefits of its enhanced scale and geographic diversification following executed and pending acquisitions, the agency said.

Moody's estimates Nexstar's two-year average revenue at about $720 million pro forma for its announced acquisitions, compared to two-year average revenue of roughly $440 million for 2012 and 2013 as reported. Furthermore, the use of free cash flow to help fund acquisitions and the reduction in cost of debt should facilitate continued strong free cash flow, the agency said.

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