Fitch affirms Portugal Telecom

Fitch Ratings said it affirmed Portugal Telecom SGPS SA's long-term issuer default rating at BBB with a negative outlook. The senior unsecured rating of Portugal Telecom Finance International BV's bonds was also affirmed at BBB.

PT continues to perform within expectations, with ongoing pressures on its domestic business offset to some extent by growth in the international (non-Brazilian) businesses and good dividend income from associate interests, the agency said.

Near-term rating pressure is driven by Portugal's sovereign rating (BB+/negative) given the degree to which sovereign pressures can influence domestically orientated corporates, the agency noted.

The company's leverage was 2.6x at year-end 2011, and is expected to trend around 2.5x, sitting reasonably well within a 3.0x downgrade threshold, the agency said.

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