Moody’s drops OTE, notes to Caa2

Moody's Investors Service said it downgraded Hellenic Telecommunications Organization SA's (OTE) corporate family rating to Caa2 from B3 and probability of default rating to Caa2-PD from B3-PD.

Concurrently, the agency downgraded the senior unsecured ratings of the global medium-term note program to provisional Caa2 from provisional B3 and the rating on the global bonds to Caa2 from B3 issued by OTE plc (OTE's fully and unconditionally guaranteed subsidiary).

All ratings remain on review for downgrade.

These actions follow the deterioration of Greece's credit profile as reflected in Moody's decision on July 1 to downgrade the Government of Greece's government bond ratings to Caa3 from Caa2 and place the ratings on review for further downgrade and to lower the foreign-currency ceiling to Caa2 from B3.

"OTE is predominantly a Greek business with approximately 70% of its revenues generated in Greece," Carlos Winzer, Moody's senior vice president and lead analyst for OTE, said in a news release.

"While OTE continues to perform in line with its business plan and has taken steps to insulate itself as much as possible from the Greek economy, the downgrade of the foreign-currency ceiling exerts pressure on OTE's ratings as the company's credit-worthiness will remain closely linked to conditions in its domestic environment."

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