Moody's rates FairPoint B2, loans Ba2, B2

Moody's Investors Service said to FairPoint Communications, Inc. a B2 corporate family rating, a B3 probability of default rating and a SGL-2 liquidity rating.

The agency also said it assigned a Ba2 (LGD 1, 0%) rating to the company's $75 million senior secured revolver and a B2 (LGD 3, 35%) rating to the company's $1 billion senior secured term loan.

The difference in the rating between the two senior secured instruments reflects the first-out waterfall position of the revolver, Moody's said.

The senior secured credit facilities constitute the permanent debt financing for FairPoint, as it emerged from Chapter 11 bankruptcy protection in January, the agency said.

The outlook is stable.

The ratings reflect the company's improved debt capital structure following the bankruptcy restructuring, which is estimated to leave the company with an adjusted debt-to-EBITDA ratio of 4.8x, Moody's said.

The rating also benefits from the cash flow contributions from the company's telecom markets outside Verizon's Northeast territories, which have not suffered from the same competitive and systems issues, the agency said.

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