S&P: Telesat Canada on watch

Standard & Poor's said it placed its ratings, including its BBB- long-term corporate credit and senior unsecured debt ratings, on Telesat Canada on CreditWatch with negative implications, following the announcement by Telesat Canada's parent company BCE Inc. (A-/negative/A-2) to recapitalize Telesat and launch an IPO.

The agency said the CreditWatch placement on Telesat Canada reflects an expected weakening of the company's financial risk profile due to the expected material increase in debt from the recapitalization and the potential for weaker financial flexibility.

S&P added the current ratings are supported by the company's stable cash flow generation from operations, material cash balances, and the potential for an enhancement to Telesat's business position through improved satellite diversification.

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