Moody's cuts MasMovil, rates Lorca debt B1, Kaixo notes Caa1

Moody's Investors Service said it downgraded to B2 from B1 the corporate family rating and to B2-PD from B1-PD the probability of default rating of Lorca Holdco Ltd., the ultimate parent of MasMovil Ibercom, SA.

Concurrently, Moody's said it confirmed the B1 ratings of the existing and new secured debt issued by Lorca Finco plc and the B1 ratings of existing and new senior secured notes issued by Lorca Telecom Bondco, SAU.

Moody's said it assigned B1 ratings to the new secured debt issued by Lorca Finco and Lorca Telecom Bondco. Moody's also assigned a Caa1 rating to the new €500 million senior unsecured notes to be issued by Kaixo Bondco Telecom, SAU.

The outlook is stable.

The rating action follows the completion of MasMovil's acquisition of Euskaltel, SA for €3.5 billion, equivalent to an EV/EBITDA multiple of around 10x, before synergies.

“We have downgraded MasMovil to B2 because the debt-financed acquisition of Euskaltel will result in initial leverage peaking at over 6x, with a gradual deleveraging towards 5x by 2023. These leverage levels are above the expectations for the previous B1 rating,” said Carlos Winzer, a Moody's senior vice president and lead analyst for MasMovil, in a news release.

“However, we have also factored in that following the acquisition of Euskaltel, MasMovil will enhance its business profile, scale, market position and resilience.”

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