Moody's rates Vodafone notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to Vodafone Group plc's issuance of $2 billion subordinated fixed-rate reset 10-year capital securities due 2079.

The outlook is negative.

Vodafone plans to use the hybrid securities to fund a portion of the €18.4 billion acquisition of Liberty Global plc's assets in Germany and Central and Eastern Europe, Moody's said.

The rating assigned to the hybrid securities is two notches lower than Vodafone's senior unsecured rating of Baa2, primarily because the instrument is deeply subordinated to other debt in the company's capital structure, Moody's said.

The two-notch rating differential reflects the deeply subordinated nature of the hybrid instruments, the agency said.

The ratings reflect the company's large size and the benefits of its broad geographical diversification with strong market positions in a number of countries, Moody's said.

The ratings also consider an expectation that Vodafone's adjusted leverage will weaken to 3.8x to 3.6x over the next two years following the completion of its acquisition of certain Liberty's assets, the agency said.

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