Rating agency Fitch has upgraded the ratings for debt issued Digicel Group Ltd, Digicel Ltd and Digicel International Finance Ltd.
Three different subordinated notes issued by DGL were upgraded to ‘B-/RR5’ from ‘CCC+/RR5’, senior notes issued by DL were upgraded to ‘B/RR4’ from ‘B-/RR4’ and DIFL’s senior secured credit facility was rated ‘B+/RR3’ up from ‘B/RR3’.
Fitch also upgraded DL’s long-term issuer default rating to ‘B’ from ‘B-’, while the rating agency assigned a long-term IDR of ‘B’ to both DGL and DIFL. The rating outlook is stable.
Fitch said the rating actions reflect Digicel’s continued strong operating performance, increasingly diversified revenue and cash flow generation, improved free cash flow generation and expectation of stable credit metrics.
In addition Digicel’s ratings are supported by its position as the leading provider of wireless services in most of its markets and strong brand recognition.
However, the ratings are tempered by continued high leverage and exposure to politically unstable countries and economies, the rating agency said in a press statement.
Fitch rates debt at DIFL one notch higher than DL, due to its above-average recovery prospects. DL’s ratings reflect the increased burden the DGL subordinated notes place on the operating assets and the loss of financial flexibility. The ratings of DGL incorporate their subordination to debt at DIFL and DL, as well as the subordinated notes’ below-average recovery prospects in the event of default.
Digicel’s recent transaction with America Movil, which saw Digicel sell its business units in El Salvador and Honduras in exchange for cash and America Movil’s Jamaican unit, Claro Jamaica, is positive for the group’s credit quality, according to Fitch.
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