Moody's cuts Caribe

Moody's Investors Service said it has downgraded Caribe Media, Inc.'s corporate family rating and probability of default rating, each to B3 from B2, and changed the outlook to negative.

The downgrades reflect Moody's concern that recessionary market conditions will worsen in Puerto Rico, Caribe's principal market, causing advertising sales to decline closer to the double-digit range experienced by a number of large incumbent yellow pages publishers in the mainland United States, the agency said.

Affected ratings include the company's $10 million senior secured revolving credit facility due 2012, down to B2, LGD3, 35% from B1, LGD3, 37%; and $126 million senior secured term loan due 2013, down to B2, LGD3, 35% from B1, LGD3, 37%.

Moody's added that it does not rate Caribe's $45 million of subordinated notes due 2014.

The downgrade of the corporate family rating to B3 is prompted by Moody's concern that weakening economic conditions will take a tighter hold on Caribe's served markets, forcing the company's largely small and medium-sized business customers in Puerto Rico and the Dominican Republic to cut spending on yellow pages advertising substantially below current levels.

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