Moody’s Mulls Axtel Upgrade

Moody’s has put Axtel’s Ba3 rating on review for upgrade after better-than-expected operating and financial results following the acquisition of Avantel, as well as the issuer’s favorable business prospects. The news affects the following bonds: $162.5m in an 11% of 2013 and $275m in 7.625% of 2017 globals. The ratings review will focus on Axtel’s ability to turn free cash flow positive in the short to medium term as well on the sustainability of the company’s increased cashflow. Specifically, Moody’s will evaluate Axtel’s income quality and stability in the context a more competitive operating environment. In the first six months of 2007, Axtel revenues reached close to $890m, with a 41.5% adjusted Ebitda margin. It is the second-largest, fixed-line telecom in Mexico with an 8% revenues market share as of June 2006, says Moody’s.