On March 6, 2019, Moody's Investors Service assigned a B1 rating to the senior secured notes due 2024 to be issued by Digicel International Finance Limited (DIFL) and Digicel Holdings (Bermuda) Limited. The Caa1 corporate family rating (CFR) of Digicel Group Limited, as well as the ratings on all existing debt instruments within the group, remain unchanged. The outlook on all ratings is stable.
The B1 rating on the new notes is aligned with the ratings of the existing DIFL debt instruments and three notches above the Caa1 CFR of Digicel, reflecting the notes positioning in the waterfall ahead of the debt instruments at Digicel Limited, Digicel Group One Limited, Digicel Group Two Limited and Digicel Group Limited.
Digicel's Caa1 CFR continues to reflect its high leverage and untenable capital structure, with the company facing large debt maturities in the coming years, and its weak liquidity profile. Digicel's liquidity has been weakening for several quarters, with negative free cash flow resulting in a decline in the company's cash balance (USD96 million at December 2018) and the full drawing of its revolving credit facility, while the increase in leverage resulted in tight leeway under its financial covenants.