US towerco Crown Castle International has received commitments from lenders for a US$5.5bn senior unsecured credit facility to repay existing debt. The news has prompted Moody’s to improve both the company’s senior unsecured ratings and outlook, saying the refinancing demonstrates its commiment to improving its balance sheet and credit profile.
US towerco Crown Castle International (NYSE:CCI) has received commitments from lenders for a US$5.5bn senior unsecured credit facility to repay existing debt. The news has prompted Moody’s to improve both its senior unsecured ratings and outlook.
The new facility is expected to consist of up to US$3.5bn of senior unsecured revolving credit facilities and a US$2bn senior unsecured term loan A, the Houston-based company, which operates as a real estate investment trust (REIT), said.
The new facility is subject to negotiation, execution, delivery of definitive documentation and customary closing conditions.
The towerco, which has a portfolio of some 40,000 towers and 15,000 small cell nodes supported by 16,000 miles of fibre, expects to close the transaction before releasing its Q4 2015 results on 27 January.
The proceeds, together with cash on hand, will be used to repay all outstanding borrowings under an existing senior secured credit facility. As of 30 September 2015, the existing facility consisted of a US$2.2bn revolver, of which about US$1bn was outstanding, and US$2.9bn of outstanding term loans.
Crown Castle’s full year forecast for interest expenses in 2016 remains at US$517m to US$537m.
Following the announcement about the new facility, Moody’s upgraded Crown Castle’s senior unsecured rating to Ba1 from Ba3, senior unsecured shelf rating to (P)Ba1 from (P)Ba3 and senior subordinate shelf rating to (P)Ba2 from (P)Ba1. The ratings agency also affirmed its family rating at Ba1 and revised its outlook to positive from stable.
Moody’s said a successful refinancing of the bank facility would significantly alleviate its concerns about the complexity and structural subordination in Crown Castle’s capital structure.
“A key credit consideration behind the two-notch upgrade of the senior unsecured rating is that the refinancing will remove a material amount of secured debt (approximately $3.9bn as of the end of Q3 2015) that would have been ranked higher than the existing unsecured notes in the recovery waterfall in a distressed scenario,” the agency said.
Moody’s said the transaction also shows the company’s commitment to improving its balance sheet and credit profile, and releases stock that makes up the collateral package under the existing credit facility, thereby eliminating the associated risks in a distressed scenario.
The refinancing also increases the REIT’s financial flexibility by extending its debt maturity profile, the agency added.
“Moody’s expects [Crown Castle’s] standing as one of the leading operators in the wireless infrastructure industry to support improving credit fundamentals over the rating horizon that could potentially trigger upward ratings movement over time if the REIT maintains its current course of simplifying its capital structure, de-leveraging and liquidity preservation.”
