Moody's rates Quebecor notes B2, ups senior secured debt to B1

Moody's Investors Service said it affirmed Quebecor Media Inc.'s Ba3 corporate family rating, affirmed all ratings at Videotron Ltee and Sun Media Corp., assigned a B2 senior unsecured rating to Quebecor's new $525 million note issue and upgraded Quebecor's existing senior secured debt rating to B1 from B2.

The outlook is stable.

Moody's said the senior unsecured and senior secured debt ratings were raised because the amount of prior-ranking consolidated debt which ranks ahead of them has been reduced.

The ratings reflect Moody's expectation that increases in capital expenditures will be offset by increasing EBITDA, primarily from double-digit growth at Videotron. Near-term expenditures on new printing presses are likely, in Moody's opinion, to create a cash drain this year and weaken several credit metrics for the rating category in 2007.

The ratings are supported by Quebecor's good market positions in the Canadian newspaper and cable sectors, relatively stable newspaper operating results and strong cable growth with relatively stable margins, the agency said.

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