DBRS has announced that it:
has today downgraded Bell Canada’s (Bell Canada or the Company) Issuer Rating and Debentures and MTN Debentures rating to BBB (high) from A (low), its Subordinated Debentures rating to BBB (low) from BBB as well as its Commercial Paper (CP) rating to R-2 (high) from R-1 (low). With Bell Canada’s Issuer Rating at BBB (high), DBRS has also downgraded BCE Inc.’s (BCE; Bell Canada’s parent company) Issuer Rating and Unsecured Debentures rating to BBB from BBB (high), its CP rating to R-2 (middle) from R-1 (low) as well as its All Classes Preferred Shares rating to Pfd-3 from Pfd-3 (high). All trends are Stable.
…
Incorporating both the MTS acquisition as well as the Q9 transaction, DBRS does not see a clear path for Bell Canada to reduce gross debt-to-EBITDA toward 2.0x by mid-2017. Additionally, DBRS estimates that the Company’s pro forma free cash flow (after dividends)-to-total debt will remain below 5% over the near to medium term because of high capital intensity and dividend payouts, which could limit management’s ability to deleverage adequately. Further exacerbating this is an increasingly challenging operating climate marked by intensifying competition in the wireless market; increased risks in the media business, including structural (cord shaving/cord cutting and over-the-top video streaming) and regulatory changes (pick and pay) affecting television broadcasting, coupled with weakness in advertising.
That said, DBRS considers Bell Canada to now be at the high end of the BBB (high) rating category. DBRS views the Company as a best-in-class telecommunications operator, exemplified by a track record of consistent EBITDA growth, industry-leading wireless average revenue per user and post-paid subscriber growth as well as sound wireline performance. Furthermore, Bell Canada has a well-entrenched market position, strong operating cash flows and coverage ratios. DBRS expects that the Company will continue to perform well operationally, and will grow pro forma EBITDA steadily above $9.0 billion over the near term to medium term, through both organic growth and the above-noted acquisitions. In terms of financial leverage, DBRS believes that debt-to-EBITDA of up to 2.75x would be commensurate with the current rating categories while continuing to consider evolving free cash flow (after dividends) levels and business risks.
DBRS’ Review-Negative was previously reported on PrefBlog.
Affected issues are (deep breath):BCE.PR.A, BCE.PR.B, BCE.PR.C, BCE.PR.D, BCE.PR.E, BCE.PR.F, BCE.PR.G, BCE.PR.H, BCE.PR.I, BCE.PR.J, BCE.PR.K, BCE.PR.M, BCE.PR.N, BCE.PR.O, BCE.PR.Q, BCE.PR.R, BCE.PR.S, BCE.PR.T, BCE.PR.Y and BCE.PR.Z.
This entry was posted on Tuesday, August 9th, 2016 at 11:27 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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DBRS Downgrades BCE to Pfd-3
DBRS has announced that it:
DBRS’ Review-Negative was previously reported on PrefBlog.
Affected issues are (deep breath):BCE.PR.A, BCE.PR.B, BCE.PR.C, BCE.PR.D, BCE.PR.E, BCE.PR.F, BCE.PR.G, BCE.PR.H, BCE.PR.I, BCE.PR.J, BCE.PR.K, BCE.PR.M, BCE.PR.N, BCE.PR.O, BCE.PR.Q, BCE.PR.R, BCE.PR.S, BCE.PR.T, BCE.PR.Y and BCE.PR.Z.
This entry was posted on Tuesday, August 9th, 2016 at 11:27 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.