Moody’s has assigned a provisional a B1 rating to €350m (US$481m) worth of senior notes proposed by the controlling shareholder of Romanian telco RCS&RDS.
The ratings agency also placed a provisional B1 on the shareholder, called Cable…
Moody’s has assigned a provisional a B1 rating to €350m (US$481m) worth of senior notes proposed by the controlling shareholder of Romanian telco RCS&RDS.
The ratings agency also placed a provisional B1 on the shareholder, called Cable Communications Systems (CCS), in the first time it has graded the group.
It said it will assign a definite rating to the proposed notes, which will reportedly hit the markets on 29 October, once it has reviewed the final documentation.
Ivan Palacios, lead analyst for RCS&RDS at Moody’s, said the rating reflects its strong market positions within the Romanian and Hungarian cable TV, internet, telephony and satellite TV markets now that a large investment phase is over.
The telco has historically reported negative free cash flow generation because of these high investment levels, but Palacios said the company currently holds a stable financial profile, and will have an improved debt maturity profile following plans to refinance.
It reported €629m in revenues for the year to 30 June 2013, and EBITDA of €258m. For 2012 its debt/EBITDA, as adjusted by Moody’s, was around 4x.
“At the same time, the rating also reflects RCS&RDS’ relatively smaller size compared with its similarly rated peer group, the highly competitive environment in which it operates, and the company’s concentration in Romania, despite some geographical diversification,” added Palacios.
According to Moody’s, around three quarters of RCS&RDS’ consolidated EBITDA comes from Romania, exposing it to emerging market risks.
JP Morgan is reportedly global coordinator for the bond, with Erste Group, Societe Generale and Unicredit as arrangers.
The notes will be used with a €300m bank facility to refinance existing debt.
CCS is majority-owned by Romanian businessman Zoltan Teszari.
Standard & Poor’s rated the proposed bond B+.
