Moody’s drops Ericsson notes to junk

Moody's Investors Service said it downgraded Telefonaktiebolaget LM Ericsson’s senior unsecured long-term rating to Ba1 from Baa3 and senior unsecured medium-term note program rating to provisional Ba1 from provisional Baa3.

Concurrently, the agency assigned Ericsson a Ba1 corporate family rating and a Ba1-PD probability of default rating, in line with the agency's practice for corporates with non-investment-grade ratings.

The outlook is stable.

"The downgrade of Ericsson's ratings reflects the anticipated negative impact on the company's operating earnings and cash flow in 2017 and 2018 due to rising restructuring charges and provisions, as recently announced by the company, leading to credit metrics that will no longer be commensurate with investment-grade ratings," Alejandro Núñez, Moody's vice president, senior analyst and lead analyst for Ericsson, said in a news release.

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