Moody's puts Euskaltel on review for downgrade

Moody's Investors Service said it placed Euskaltel, SA's B1 corporate family rating, the B1-PD probability of default rating and the B1 ratings of its existing backed senior unsecured bank credit facilities on review for downgrade.

The rating action follows the announcement by Masmovil of a public takeover bid for 100% of Euskaltel's shares for €2 billion.

“We are placing Euskaltel's ratings on review for downgrade because the debt-financed acquisition of the company will likely result in weaker credit metrics for the combined entity, including leverage rising initially to over 6.0x, which is higher than our earlier guidance for the B1 rating for leverage not to exceed 5.0x. The weaker metrics will be partially offset by its increased scale and potential synergies,” said Agustin Alberti, a Moody's vice president-senior analyst and lead analyst for Euskaltel, in a news release.

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