Fitch: Veolia view to positive

Fitch Ratings said it affirmed Veolia Environnement SA's long-term issuer default rating and senior unsecured rating at BBB.

The rating of its undated deeply subordinated notes also was affirmed at BB+.

The outlook also was revised to positive from stable.

The outlook revision reflects acceleration in revenues across all of the company's businesses, supported by a higher target for 2016 through 2018 cost reductions, Fitch said.

The agency also said it expects Veolia to turn slightly free cash flow positive from 2018 and for fixed charge cover to remain within positive guidelines.

However, capital expenditures are likely to increase and any large-scale debt-funded mergers and acquisitions would limit rating upside, Fitch said.

The agency added that Veolia needs to cut costs in order to remain competitive.

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