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VZ Secured Financing B.V. -- Moody's assigns a B1 rating to VZ Secured Financing B.V.'s senior secured notes due 2032; outlook stable

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Rating Action: Moody's assigns a B1 rating to VZ Secured Financing B.V.'s senior secured notes due 2032; outlook stableGlobal Credit Research - 05 Jan 2022London, 05 January 2022 -- Moody's Investors Service ("Moody's") has today assigned a B1 instrument rating to the proposed senior secured $-denominated and E-denominated notes due 2032 to be issued by VZ Secured Financing B.V., a newly created special purpose vehicle. The outlook is stable.The proceeds from the proposed senior secured notes due 2032 issued by VZ Secured Financing B.V. will be on-lent to Ziggo B.V., a subsidiary of VodafoneZiggo Group B.V. (VodafoneZiggo, B1 stable), in the form of new $-denominated and E-denominated Finco Loans under the existing VodafoneZiggo Credit Facility. Ziggo B.V. will then use the proceeds from the new Finco Loans to refinance the outstanding USD1.6 billion backed senior secured notes due 2027 and the outstanding EUR620 million backed senior secured notes due 2027. The new Finco Loans will benefit from the same guarantee and security packages as the existing loans raised under the VodafoneZiggo Credit Facility.RATINGS RATIONALEThe B1 instrument rating assigned to the proposed senior secured notes due 2032 reflects their pari passu ranking with senior secured bank credit facilities and other senior secured notes, rated B1, in line with VodafoneZiggo's B1 corporate family rating (CFR). The pari passu ranking of the proposed senior secured notes and senior secured bank credit facilities reflects Moody's view that the on-lending of the proposed senior secured notes within the VodafoneZiggo senior secured restricted group via the new Finco Loans establishes a claim position for holders of such notes that is broadly equivalent to that of existing lenders under the VodafoneZiggo bank facility.The first-ranking position of the senior secured debt and senior secured credit facilities reflects the fact that they benefit from a comprehensive guarantor coverage -- guarantors represented 81.7% of the group's total assets, 98.1% of pro forma EBITDA, and 97.0% of group's revenue for the nine months ended 30 September 2021 -- and are secured by certain property and assets of guarantors, including certain real estate, bank accounts, intellectual property right, receivables and moveable and immovable assets of the guarantors. The company has the option to remove the all-asset security granted for the senior secured facilities and senior secured bonds although we do not expect this option to be exercised. The senior secured debt benefits from the buffer provided by the vendor-financing obligations and senior notes which rank behind this debt. Receivables under the vendor financing programme and the VFZ facility are unsecured obligations of VZ Vendor Financing II B.V. and VodafoneZiggo Group B.V. VZ Vendor Financing II B.V. is structurally subordinated to the obligors of the senior secured indebtedness of VodafoneZiggo but is structurally senior to the obligors of the senior notes.The stable outlook on VodafoneZiggo reflects Moody's expectation that the company will continue to experience growth in revenue and EBITDA supported by increasing fixed mobile convergence with a stable competitive environment while maintaining Moody's adjusted gross leverage at or below 6.0x.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward rating pressure could develop if (1) VodafoneZiggo's operating performance continues to improve significantly reflected in an acceleration of revenue and EBITDA growth; (2) its Moody's adjusted gross debt-to-EBITDA falls below 5.0x on a sustained basis; and (3) VodafoneZiggo's cash flow generation improves such that Moody's-adjusted cash flow from operations (CFO)/debt increases to above 15%. Downward rating pressure is likely if (1) the operating performance of the group weakens significantly on a sustained basis because of intense competition in the market and (2) adjusted gross debt-to-EBITDA increases to well above 6.0x and CFO/debt falls below 10% on a sustained basis.The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017 and available at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1055812. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.COMPANY PROFILEVodafoneZiggo is a 50-50 joint venture owned by Liberty Global plc (Ba3 stable) and Vodafone Group Plc (Baa2 stable). The joint venture was created in December 2016. VodafoneZiggo is the second-largest operator in the Dutch telecommunications market and the only significant cable communications operator in the Netherlands. Neither Liberty Global nor Vodafone consolidates the joint-venture in its accounts.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain 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.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, 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 issued the credit rating is available on www.moodys.com.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.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Sebastien Cieniewski VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Ltd. One Canada Square Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Mario Santangelo Associate Managing Director Corporate Finance Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. 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