S&P slices Telesat Canada

S&P said it cut Telesat Canada’s issuer and senior secured debt ratings to B from BB-. The secured debt’s 3 recovery rating is unchanged. The agency also lowered the company’s unsecured notes to CCC+ from B and left the 6 recovery rating unchanged. Additionally, S&P removed all the ratings from CreditWatch with negative implications where they were placed on Feb. 10, 2021. The outlook is negative.

“Industry oversupply and technological substitution will continue to cause a decline in Telesat's legacy GEO operations. In addition to the downgrade and negative outlook on Telesat, we revised our business risk profile to fair from satisfactory, reflecting our view of weakening industry fundamentals and technology-led oversupply that continue to re-price Telesat's GEO operations at a lower level diminishing revenues (and cash flow) visibility,” S&P said in a press release.

Despite increased leverage and negative free cash flow, S&P said outside financing and liquidity should ensure the next generation of satellites, or low earth orbit, is substantially funded. However, commercialization of the low earth orbit satellites is not expected until 2026.

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