Moody’s cuts Dex Media CFR to Ca, notes to C

Moody's Investors Service said it downgraded Dex Media, Inc.'s probability of default rating to Ca-PD/LD from Caa3-PD and corporate family rating to Ca from Caa3.

The limited default "LD" designation appended to Dex's probability of default rating reflects the agency’s view that the company has defaulted under Moody's definition. The limited default designation will remain for three business days to reflect the view that a default has occurred.

Concurrently, Moody’s lowered the senior subordinated notes to C from Ca.

The senior secured credit facilities of Dex Media East, Inc., Dex Media West, Inc., R.H. Donnelley Inc. and SuperMedia Inc. remain unchanged at Caa3.

The outlook remains negative.

The downgrade reflects Dex's missed Sept. 30 interest payment on its senior subordinated notes and the subsequent failure to make the payment during the grace period. Moody's views this as a limited default as it represents a default of only one element of the company's capital structure.

Should the company default on other elements of its debt capital, execute a distressed exchange or pursue a formal reorganization under the U.S. Bankruptcy Code, ratings could be downgraded further, the agency said. Additionally, ratings could be downgraded further if Moody's comes to expect the recovery values on Dex's debt instruments to be lower than currently estimated.

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