Moody’s cuts Veonet loans

Moody’s Ratings said it downgraded Veonet Lense GmbH’s senior secured bank credit facilities to B3 from B2, including the new €190 million incremental loan split into euro- and pound sterling tranches.

The add-on will be used to repay €94 million of the outstanding €208 million of second-lien debt, repay €54 million of revolving credit facility drawing as well as deposit €40 million of cash on the balance sheet.

“The downgrade of the senior secured bank credit facilities is driven by the repayment of a large portion of second-lien debt (a subordinated class of debt which acts as a loss-absorption buffer) with the issuance of first-lien senior secured debt,” Moody’s said in a press release.

The agency concurrently affirmed Veonet’s B3 ratings and revised the outlook to positive from stable.

“The positive outlook reflects the improving trajectory of the company's key credit metrics over the next 12 to 18 months, driven by the strong growth of its core business, with leverage expected to reduce below 6.5x, FCF to debt to increase towards 5% and interest cover ratio to improve above 2x in the next 12 to 18 months,” the agency said.

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