Moody’s cuts Windstream Services

Moody’s Investors Service said it downgraded the corporate family rating of Windstream Services, LLC to Caa3 from Caa1 and downgraded the probability of default rating to Caa3-PD from Caa1-PD.

The downgrade was prompted by the U.S. District Court Southern District of New York ruling on Feb. 15 against Windstream in a case involving Aurelius Capital Management and U.S. Bank NA.

The court concluded that Aurelius is entitled to the relief it seeks, awarding a money judgment in an amount of about $310 million plus interest.

Moody's said it views this legal outcome for Windstream as a negative that increases default risk and impairs refinancing actions that might have further strengthened its balance sheet in the intermediate term.

The agency also downgraded Windstream's first-lien secured rating to Caa3 from Caa1, its second-lien secured rating to Ca from Caa2 and its unsecured rating to Ca from Caa2.

Windstream's speculative grade liquidity rating was changed to SGL-4 from SGL-2.

The outlook remains negative.

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