S&P rates Interoute notes B+

Standard & Poor’s said it assigned a B+ long-term corporate credit rating to Interoute Communications Holdings Ltd., along with a B+ rating to the company’s €590 million senior secured notes.

The outlook is stable.

These ratings are in line with the preliminary ratings assigned in September.

The rating reflects Interoute’s fair business risk profile and aggressive financial risk profile, S&P said.

Interoute has recently issued €590 million of senior secured notes that will be used along with €75 million of funds from its shareholders to fund the acquisition of Easynet, the agency said.

The ratings are supported by the company’s high level of recurring revenue through long contractual relationships with both telecom providers and enterprises, S&P said.

These contractual relationships, along with relatively meaningful switching costs, result in a very low churn rate for Interoute and provide relatively high visibility for its future revenue streams, the agency said.

The company does operate in a highly competitive network segment, which leads to consistent pricing pressures despite continued growth in demand for data capacity, S&P said.

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