Fitch cuts Philippine Long Distance view to negative

Fitch Ratings said it affirmed Philippine Long Distance Telephone Co.'s long-term foreign-currency issuer default rating and outstanding global bonds and senior notes at BB+ and its national long-term rating at AAA(phl). Fitch also said it affirmed its long-term local-currency issuer default rating at BBB, but revised the outlook on that rating to negative from stable.

The rest of the ratings carry a stable outlook.

The action follows the company's agreement to acquire a 20% stake in electricity utility, Manila Electric Co. from the Lopez Group, for 20 billion in Philippine peso, which represents about 40% of the group's pre-dividend free cash flow.

The negative outlook on the local-currency rating reflects limited headroom for a further increase in net leverage, and in this regard the agency said it maintains a cautious view with respect to its weak financial position and the potential financial support that it may require.

The ratings remain constrained by the country ceiling of the Republic of the Philippines, which is currently BB+, the agency added.

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