Moody's confirms Philippine Long Distance

Moody's Investors Service confirmed Philippine Long Distance Telephone Co.'s senior unsecured debt at Ba2 with a negative outlook and its preferred stock at B1 with a stable outlook.

Moody's said the confirmation affirmation follows the issuance of an invitation by its cellular subsidiary Smart Communications, Inc.'s to creditors of affiliate Pilipino Telephone Corp. to offer to sell their Piltel debt to Smart.

The negative outlook for the senior unsecured debt reflects the negative outlook for the Philippines' Ba2 foreign currency sovereign rating.

Moody's said the transaction will increase Philippine Long Distance's consolidated leverage as debt at Smart would rise and interest coverage would be adversely affected.

However, Moody's said the impact on the credit metrics of Philippine Long Distance is acceptable within the current rating. However if the offer terms are substantially amended to increase the cost to Smart, Moody's will revisit the impact on Philippine Long Distance's rating.

Philippine Long Distance's wireless business should benefit from the closer operational alignment of Smart and Piltel, Moody's said. Furthermore, Piltel has significant tax losses, which would become available to the Philippine Long Distance group once the former is consolidated.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.