Leading ratings agency, Fitch, says Digicel's improved creditworthiness coming from its $1.85 billion deal to sell its Pacific unit will be limited as a result of its aggressive manoeuvres to restructure its debt twice in recent years.
However, the Irish Times says both Fitch and rival Moody's have confirmed that they have put their Digicel credit ratings on review for upgrades as a result of the planned sale of the division, announced last week to Australian telco Telstra.
With $250 million of the $1.85 billion consideration subject to Digicel meeting certain earnings targets in the coming years, Digicel plans to use most of the upfront proceeds to redeem its $1.05 billion of senior secured notes that would ordinarily fall due in 2024 as well as most of its $425 million senior unsecured notes that are set to mature in 2025.
The Irish Times quoted Moody's as saying that its review may lead to a "multi-notch upgrade" from its current Caa2 Digicel rating, which is seven levels below what is classified as investment grade. Fitch has also signalled it may upgrade its Digicel rating from a similarly-low "junk bond" level.
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