Moody's cuts CapRock loans to B1

Moody's Investors Service said it affirmed the B2 corporate family and probability-of-default ratings for CapRock Communications Inc. and revised the outlook to negative due to liquidity concerns including elevated revolver use and heightened operating risk over the next 12 months.

Moody's also downgraded the rating on the first-lien secured bank facility to B1 (LGD3, 33%) from Ba3.

The agency said it could lower ratings if the issuer's debt-to-EBITDA ratio remains above 5.5 times or free cash flow remains negative over the next 12 to 18 months.

CapRock's B2 corporate family rating continues to reflect the company's small scale, high customer concentration, elevated leverage and minimal free cash flow, the agency said.

Ratings are supported by blue-chip customers, significant barriers to entry, a healthy contract pipeline and good customer retention rates, Moody's said.

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