Moody's downgrades Cyxtera DC

Moody's Investors Service said it downgraded Cyxtera DC Holdings, Inc.'s corporate family rating to B2 from B1 and probability of default rating to B2-PD from B1-PD.

The outlook is stable.

The senior secured first-lien credit facility, consisting of an $803 million term loan and $150 million revolver, was downgraded to B1 (LGD 3) from Ba3 (LGD 3) and the senior secured second-lien term loan was downgraded to Caa1 (LGD 5) from B3 (LGD 5).

These downgrades are the result of difficulties associated with Cyxtera's May 2017 carve-out of data center assets from CenturyLink, Inc., which have delayed formerly expected de-leveraging trends.

Efforts to successfully establish standalone operating systems and processes and rebuild the company's sales force were compounded by a delayed deal closing, Moody's said, as well as distractions caused by CenturyLink's merger with Level 3 Communications, Inc.

The result has been weaker-than-expected revenue, margin and bookings trends and delayed cost reduction efficiencies that have extended expectations for leverage declining to 5.5x, the agency said.

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