Moody’s gives Communications Sales notes Caa1

Moody's Investors Service said it assigned a Caa1 (LGD5) rating to Communications Sales & Leasing, Inc.'s proposed $400 million senior unsecured notes, in line with the existing senior unsecured ratings.

Proceeds will be used to repay outstanding amounts under the company's revolving credit facility or for general corporate purposes.

CSL Capital, LLC will be the co-issuer on the proposed notes reflecting the recent reorganization to an "up-REIT" structure.

Moody’s said the B2 corporate family rating primarily reflects the company’s tight linkage with Windstream Services, LLC (B1 stable). The rating will remain linked with Windstream unless or until it can diversify its revenue stream such that Windstream represents meaningfully less than 50% of Communications Sales’ total revenues.

The rating also contemplates the company’s high leverage of over 5 times and its limited retained free cash flow as a result of its high dividend payout and the growing capital intensity of acquired businesses, the agency added.

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