Moody’s has downgraded Eutelsat by a notch to Baa3 after the French satellite operator announced plans to issue a bond to fund its acquisition of Mexican peer Satmex.
Banca IMI, Credit Agricole, Mitsubishi UFJ and Societe Generale have been mandated…
Moody’s has downgraded Eutelsat by a notch to Baa3 after the French satellite operator announced plans to issue a bond to fund its acquisition of Mexican peer Satmex.
Banca IMI, Credit Agricole, Mitsubishi UFJ and Societe Generale have been mandated to arrange a series of investor meetings starting 4 December.
The company said a senior unsecured euro denominated bond could follow the roadshow and would be used to support its US$1.142bn Satmex deal, which is to be fully-funded through debt, predominantly via the bond markets.
In September it finalised a two-year US$850m bridge term loan for Satmex, and also refinanced a €450m (US$612m) revolver to extend it to September 2018 on improved terms.
Moody’s had earlier warned it could downgrade the group over the acquisition, and it has also reduced the Baa3 senior unsecured rating on Eutelsat’s bank credit facility to Ba1.
Along with the new debt for Satmex, the French operator’s existing satellite investment programmes and its long-term capital leases is set to push its net debt to EBITDA ratio to above 3.3x, although the group aims to take it below that level and maintain its investment grade status in the long term.
Gunjan Dixit, Moody’s lead analyst for Eutelsat, said: “We have downgraded Eutelsat’s ratings because its leverage will increase significantly as a result of its funding of the Satmex acquisition with 100% debt. We also expect the company will only slowly deleverage over the next three years due to its major investment programme and its long-term lease contracts for satellite capacity.”
Standard & Poor’s continues to rate the group at BBB with a negative outlook.
Eutelsat reported revenues for the three months to 30 September 2013 up 2.9% to €323.5m (US$440m), compared with the corresponding period last year.
It is targeting an EBITDA margin of around 77% for each fiscal year until 2016.