DIGICEL has returned to the international bond market with a near US$2 billion offer as part of a major new effort to refinance existing debt.
In a move that has been assigned a ‘B’ (highly speculative) rating from Fitch, the telecommunications group is also seeking to secure at US$750 million term loan and to access US$200 million in credit facilities.
Digicel’s offerings of senior secured notes and senior unsecured notes and the proposed new credit facilities do not relate to the company’s operations in Barbados.
The debt offer was announced on July 23. It is comprised of US$1.5 billion of senior secured notes due 2032 to be co-issued by Digicel International Finance Limited (DIFL) and DIFL US LLC and US$415 million of senior unsecured notes due 2033 to be co-issued by Digicel MidCo Limited (DML), the indirect parent of DIFL, and DIFL US II LLC.
It was also announced that DIFL is seeking to enter into a new credit facility consisting of new “seven-year first lien senior secured term loans” of US$750 million and “a new fiveyear first lien senior secured revolving credit facility” of US$200 million.
The new bonds and credit facilities “will be guaranteed by Digicel Intermediate Holdings Limited (DIHL), the direct parent company of DIFL and a wholly owned direct subsidiary of DML, and certain of DIFL’s subsidiaries”.
Digicel said it “intends to use the net proceeds from the offering of the notes, together with the expected proceeds from the new DIFL first lien term loans and available cash, to repay DIFL’s existing credit facility, redeem in full the outstanding nine per cent senior secured first lien notes due 2027 coissued by DIHL, DIFL and DIFL US LLC and the outstanding 10.50 per cent senior notes due 2028 co-issued by DML and DIFL US II LLC and pay fees and expenses incurred in connection therewith”.
Stable rating outlook
In a rating action commentary published on the same day the Digicel offerings were launched, Fitch analysts Ricardo Junqueira, Alexandre Garcia, and Martha Rocha announced that the credit rating agency assigned a ‘B’ to the US$1.55 billion senior secured notes and US$750 million term loan.
The firm also assigned a rating of ‘B-’ to the US$415 million unsecured notes and said the rating
“reflects the notes’ structural subordination in the group’s structure and lower recovery prospects”.
“Digicel and DIFL have long-term foreign currency issuer default ratings of ‘B’ and stable rating outlooks. The proposed new refinancing will further extend the companies’ existing debt maturity and improve financial flexibility,” the Fitch analysts stated.
“As a leading Caribbean mobile operator, Digicel maintain metrics aligned with the ‘B’ rating category. However, weak operating environments in markets like Haiti and currency depreciation risks offset these strengths.”
Diversification
The Fitch report also stated: “The ratings reflect Digicel’s strong market and diversification across 25 Caribbean markets, where duopoly conditions often reduce the risk of new entrants and sustain consistent [pretax earnings margins before leases] of about 40 per cent.
“In the mobile segment, most of Digicel’s subscribers are pre-paid consumers, making them more price sensitive. While Digicel is expanding into higher-growth B2B solutions and home entertainment, these segments contribute about 25 per cent of revenues.”
The Fitch representatives noted that the group’s liquidity improved following its group’s restructuring “with a reduction in cash interest burden and an extension of the debt amortisation profile”.
“Fitch expects Digicel to successfully refinance its debt, extending the maturity schedule to 2032 and improving its financial flexibility thanks to the addition of the new revolving credit facility,” they said.
“Of the consolidated US$2.8 billion of debt as of March 2025, US$2.3 billion (excluding leases) is at the DIFL level, US$455 million at the Digicel Midco level. The DIFL debt comprises US$1.3 billion of secured notes and US$1 billion of secured term loans due May 25, 2027. The Digicel Midco debt mainly comprises US$455 million of unsecured PIK/cash notes due November 25, 2028.” (SC)
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