Moody’s might lower MegaFon

Moody's Investors Service said it placed under review for downgrade the Ba1 corporate family rating and the Ba1-PD probability of default rating of MegaFon PJSC.

The agency said the action follows the announcement by MegaFon Investments (Cyprus) Ltd., a wholly owned subsidiary of MegaFon, of a tender offer to purchase for cash up to 128,950,036 of ordinary shares listed on the Moscow Exchange and the global depositary receipts listed on the London Stock Exchange, representing in total 20.8% of the company's issued and outstanding shares.

The buyback is part of the approved program to terminate the listing of global depositary receipts on the London Stock Exchange and materially reduce the free float on the Moscow Exchange.

If successful, it will result in the company becoming fully private, Moody’s explained.

“The action is primarily driven by the anticipated increase in leverage as a result of the transaction, which is likely to lead to a credit profile no longer commensurate with the current ratings' positioning at Ba1 with a positive outlook,” the agency said in a news release.

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