Moody's rates Telemar Norte notes Baa2

Moody's Investors Service said it assigned a Baa2 foreign-currency rating to the proposed senior unsecured notes of about €750 million due December 2017 to be issued by Telemar Norte Leste SA.

The outlook is stable.

The proposed new issuance is part of the company's liability management to improve its debt maturity profile, the agency said, and will not affect its leverage metrics since the majority of the net proceeds will be used to pay-off maturing debt.

The agency also said it affirmed the group's ratings.

Telemar Norte Leste's global-scale senior unsecured issuer rating was affirmed at Baa2, $1 billion 5½% senior unsecured foreign-currency notes due in October 2020 at Baa2, R$2.16 billion senior unsecured local currency debentures issued in two tranches due in 2011 and 2013 at Baa2 and Aaa.br, R$2.57 billion senior unsecured local-currency debentures issued in two tranches due in 2011 and 2012 at Baa2 and Aaa.br and R$2.25 billion in senior unsecured local-currency debentures issued in two series due in 2015 and 2020 at Baa2 and Aaa.br.

Tele Norte Leste Participações SA's global-scale senior unsecured issuer rating was affirmed at Baa3 and $300 million 8% structured notes due 2015 at Baa3.

Brasil Telecom SA's global scale senior unsecured issuer rating was affirmed at Baa2 and Aaa.br, along with its $200 million 9.375% structured notes due 2014 at Baa2.

The outlook is stable.

The ratings reflect the leading market position of its incumbent wireline operations in its concession region, the historically robust EBITDA margin, prudent financial policies contributing to its overall strong debt protection metrics and good level of corporate governance standards when compared to other Brazilian issuers, Moody's said.

The rating also reflects the potential for synergies resulting from the increased negotiating power and economies of scale associated with the Portugal Telecom alliance announced in July 2010, the agency said.

The ratings are constrained by the regulatory, political and economic risks associated with operating in Brazil, Moody's added.

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