Fitch ups Eutelsat unsecured rating

Fitch Ratings said it raised Eutelsat SA’s (ESA) senior unsecured debt rating to BB+/RR4 from BB- removed it from rating watch positive but downgraded Eutelsat Communications SA’s (Eutelsat) issuer default rating to B+ from BB- and removed it from rating watch negative and assigned a negative outlook.

The agency also assigned a final BB+ issuer rating to ESA with a negative outlook and affirmed Eutelsat's senior unsecured debt rating at B+ and assigned an RR4 recovery rating.

The rating actions reflect covenant and cash-flow restrictions at ESA created by the legal terms of the company's newly issued bond. These restrictions have led to an assessment of porous ring-fencing and control based on Fitch's parent subsidiary linkage (PSL) criteria. As a result, ESA is rated two notches above the consolidated group profile of BB- and in line with the operating subsidiary's stand-alone credit profile of bb+. The cash-flow restrictions result in Eutelsat being rated one notch below the group's consolidated rating profile,” the agency said in a press release.

In explaining the negative outlook, Fitch added “We expect Eutelsat's group-wide leverage to increase to above 4x net debt/EBITDA on significantly lower EBITDA generation in financial year ending June 2024, with close to 4.5x leverage in the medium term. In January 2024 the company revised its group-level FY24 EBITDA guidance to €650 million-€680 million from €725 million-€825 million, around €110 million lower at the mid-point, or by approximately 15%.”

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