S&P puts Er-Telecom on watch

S&P said it placed the B+ long-term corporate credit rating and ruA Russia national scale rating on Er-Telecom on CreditWatch with negative implications.

The CreditWatch placement stems from Er-Telecom's more acquisitive growth strategy than previously expected, which could result in its leverage ratio remaining higher than 3.5x in 2017 to 2018, compared with about 3.8x at year-end 2016, S&P said.

For instance, in the first quarter of 2017, Er-Telecom made a debt-financed acquisition for RUB 4.2 billion and is currently placing a new RUB 3 billion domestic bond will be only partly used to refinance outstanding debt, the agency explained.

S&P said it assumes the company could somewhat reduce its leverage through contributions from newly acquired entities and potential synergies.

But the agency said it currently has very limited visibility regarding the company's targets, the expected EBITDA from the newly acquired assets or the potential integration costs.

© 2015 Prospect News.
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