Moody's lowers Equinix notes, rates new notes Ba3

Moody's Investors Service said it assigned a Ba3 (LGD 4, 55%) rating to Equinix, Inc.'s proposed $1 billion senior unsecured notes in seven and 10-year tenors.

Moody's also said it downgraded the rating on the company's $750 million 7% senior unsecured notes due 2021 to Ba3 (LGD 4, 55%) from Ba2 (LGD 3, 41%).

The agency also affirmed Equinix's Ba3 corporate family rating, Ba3-PD probability of default rating and the SGL-1 speculative grade liquidity rating.

The outlook is positive.

The proceeds will be used to redeem the 8 1/8% senior notes due 2018, pay associated redemption fees and for general corporate purposes, including enhancing cash balances.

The transaction is viewed favorably due to the extension of the debt-maturity structure with the elimination of the 2018 notes and comparatively lower annual-interest expense, Moody's said.

The ratings reflect the company's position as the leading global independent data center operator offering carrier-neutral data center and interconnection services to large enterprises, the agency said.

The ratings also recognize the favorable near-term growth trends for data center services across the world, driven by rapid growth in Internet penetration and usage, Moody's said.

The ratings are tempered by significant industry risks, intensifying competition, relatively high capital intensity inherent in the company's business plans and the ongoing capital expansion, which will likely continue to consume cash resources over the next two to three years, the agency added.

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