Fitch rates Eutelsat, notes BB+

Fitch Ratings said it assigned Eutelsat SA (ESA) an expected BB+ long-term issuer default rating with a negative outlook. The agency also placed Eutelsat Communications SA's (Eutelsat) BB- IDR on rating watch negative.

Fitch also assigned expected BB+/RR4 ratings to ESA's planned €600 million bond and placed ESA's existing BB- senior unsecured debt rating on rating watch positive because it expects to boost it to BB+/RR4 if the company's proposed new bond is issued as expected. Finally, the agency affirmed Eutelsat's existing senior unsecured ratings at B+/RR5.

“Eutelsat's IDR is likely to be downgraded by one notch to B+ with a negative outlook if the proposed bond at ESA is issued as expected, the agency said in a press release.

“The rating changes reflect covenant and cashflow restrictions at ESA created by the legal terms of the company's proposed new bond. These restrictions have led to an assessment of porous ring-fencing and control based on Fitch's parent subsidiary linkage 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 cashflow restrictions lead Eutelsat to be rated one notch below the group's consolidated rating profile,” the agency said in a press release.

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