Moody’s downgrades MTN notes

Moody's Investors Service said it downgraded MTN Group Ltd.’s senior unsecured notes issued by MTN (Mauritius) Investments Ltd. to Ba1 from Baa3.

Concurrently, the agency assigned MTN a Ba1 corporate family rating and a Ba1-PD probability of default rating and has withdrew MTN's long-term Baa3 issuer rating, in line with the agency's practice for corporates with non-investment-grade ratings.

The outlook was changed to stable from negative.

Moody’s said the downgrade was driven by the downgrade of the South African sovereign bond ratings to Baa3 negative, which reflects the weakening credit profile of South Africa, a key input into our assessment of MTN's overall rating position.

MTN is facing a number of headwinds in its key markets, South Africa (Baa3 negative) and Nigeria (B1 stable), including weak macro-economic environments, regulation challenges, local currency weakness and dollar shortages (in Nigeria), which negatively impacted MTN's overall performance and resulted in weaker credit metrics, the agency added.

In the absence of more conservative financial policies, credit metrics will remain under pressure given Moody's expectation these macroeconomic headwinds are likely to persist for the next 12 to 18 months.

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