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Rating Action:

Moody's rates Crown Castle's new secured notes Baa3, affirms credit facilities and CFR at Ba2 and downgrades liquidity rating to SGL-2; outlook stable

11 Dec 2012

Approximately $1.5 billion of new debt rated and $7 billion of existing debt affirmed

New York, December 11, 2012 -- Moody's Investors Service has assigned a Baa3 rating to Crown Castle International Corp.'s ("Crown Castle" or the "company") proposed $1.5 billion senior secured notes (5-year and 10-year tranches) to be issued by CC Holdings GS V LLC ("GS V"), a wholly-owned operating subsidiary. In addition, Moody's affirmed the Ba2 ratings on the existing bank credit facilities residing at Crown Castle Operating Company ("CCOC"), which consists of a $500 million Term Loan A due 2017, $1.6 billion Term Loan B due 2019 and $1 billion secured revolving credit facility due 2017. Moody's also affirmed Crown Castle's Corporate Family Rating (CFR) and Probability of Default Rating (PDR), both at Ba2, as well as the B1 ratings on the existing unsecured notes issued by Crown Castle. Finally, Moody's lowered Crown Castle's Speculative Grade Liquidity Rating to SGL-2 from SGL-1. The rating outlook is stable.

New issue proceeds will be used to repay the $830 million outstanding 9% senior unsecured notes due January 2015 (rated B1) and $965 million outstanding 7.75% senior secured notes due May 2017 (rated Baa2). Since the transaction is neutral to Crown Castle's credit profile, the CFR and PDR remain unchanged. However, because the financing significantly increases the proportion of senior secured debt at GS V relative to debt residing at Crown Castle (the parent entity where the most junior debt in the capital structure resides), the new GS V obligations are rated one notch lower than the existing GS V debt. This reflects the higher loss absorption that this class of debt will sustain relative to the reduced liabilities at Crown Castle in a distressed scenario under Moody's Loss Given Default (LGD) Methodology. The downgrade of the liquidity rating to SGL-2 reflects Moody's view that Crown Castle's recent draw of $750 million (estimated) to fund the T-Mobile acquisition, represents considerable utilization of the revolver and reduces the company's access to committed external liquidity.

Rating Assigned:

Issuer: CC Holdings GS V LLC

$500 Million Senior Secured Notes due 2017 -- Baa3 (LGD-2, 23%)

$1.0 Billion Senior Secured Notes due 2023 -- Baa3 (LGD-2, 23%)

Ratings Affirmed:

Issuer: CC Holdings GS V LLC

$965 Million 7.75% Senior Secured Notes due 2017 -- Baa2 (LGD-2, 11%)

Issuer: Crown Castle Operating Company

$3.1 Billion Senior Secured Credit Facilities with various maturities -- Ba2, LGD assessment revised to (LGD-4, 60%)

Issuer: Crown Castle International Corp.

Corporate Family Rating -- Ba2

Probability of Default Rating -- Ba2

$830 Million 9% Senior Unsecured Notes due 2015 -- B1 (LGD-5, 89%)

$500 Million 7.125% Senior Unsecured Notes due 2019 -- B1, LGD assessment revised to (LGD-6, 91%)

$1.65 Billion 5.25% Senior Unsecured Notes due 2023 -- B1, LGD assessment revised to (LGD-6, 91%)

Rating Downgraded:

Issuer: Crown Castle International Corp.

Speculative Grade Liquidity Rating to SGL-2 from SGL-1

The assigned ratings are subject to review of final documentation and no material change in the size, terms and conditions of the transaction as advised to Moody's. Upon redemption of the 9% senior unsecured notes and 7.75% senior secured notes Moody's will withdraw the ratings.

RATINGS RATIONALE

Crown Castle's Ba2 Corporate Family Rating (CFR) reflects management's use of the company's solid business profile, stable and predictable revenue steam, modest capital intensity and significant free cash flow generation to sustain a somewhat aggressive capital structure that has supported debt-financed growth and shareholder returns. Pro forma for the recent acquisition of tower assets from T-Mobile and the contemplated refinance transaction, we estimate total debt to LTM EBITDA leverage (includes Moody's standard adjustments and T-Mobile LTM EBITDA) will increase to approximately 7.8x compared to 6.7x at September 30, 2012. While this is somewhat higher than the 7.5x downgrade trigger that we have previously articulated, the ratings assessment is based on leverage returning to a range of 6.7x to 7.3x by year end 2013 from a combination of EBITDA expansion and repayment of revolver borrowings.

Rating Outlook

The rating outlook is stable, reflecting Crown Castle's solid operating performance, visible revenue growth via a significant backlog of contractual rents and increasing wireless carrier demand. The stable outlook also reflects our expectations of continued EBITDA and cash flow expansion that will support improvement in the company's credit profile and leverage metrics over the rating horizon. To the extent deleveraging is delayed beyond our expected timeframe, ratings would likely experience downward pressure.

What Could Change the Rating - Down

The ratings may face downward ratings pressure if weakening industry fundamentals, a return to more aggressive financial policies (e.g., return of capital to shareholders via share repurchases) or lower-than-expected cash flow growth result in the following Moody's adjusted key credit metrics on a sustained basis: total debt to EBITDA approaching 7.5x, (EBITDA-Capex)/Interest trending under 1.5x and free cash flow to adjusted total debt in the low single digits.

What Could Change the Rating - Up

Despite the increase in leverage resulting from the pending T-Mobile acquisition, Moody's expects the de-leveraging trend to continue, and further upward ratings migration would be dependent upon Crown Castle allocating a significant portion of free cash flow generation towards absolute debt reduction. Quantitatively, upwards rating pressure may develop if Crown Castle manages its capital structure to the following Moody's adjusted key credit metrics on a sustained basis: total debt to EBITDA trending towards 6x, (EBITDA-Capex)/Interest exceeding 2x and free cash flow to adjusted total debt in the high single digits.

The principal methodology used in rating Crown Castle International Corp. was Global Communications Infrastructure Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

With headquarters in Houston, Texas, Crown Castle International Corp., through its wholly-owned operating subsidiaries, is the largest independent operator of wireless tower assets in the US offering wireless communications coverage in 92 of the top 100 US markets. The firm derives approximately 88% of its revenue by leasing site space on its approximately 30,000 towers and 1,700 distributed antenna systems (DAS) networks in the US and Australia to wireless service providers, with the remaining revenue derived from its services business, which provides network services relating to sites or wireless infrastructure for customers. Revenue was approximately $2.3 billion for the twelve months ended September 30, 2012.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following : parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Gregory A Fraser
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Bill Wolfe
Senior Vice President
Corporate Finance Group
(416) 214-1635

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's rates Crown Castle's new secured notes Baa3, affirms credit facilities and CFR at Ba2 and downgrades liquidity rating to SGL-2; outlook stable
No Related Data.
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