S&P rates Telesat Canada notes BB-

S&P said it assigned its BB- issue-level and 3 recovery ratings to Telesat Canada's proposed $500 million of senior secured note issuance due in 2026. The 3 recovery rating reflects an expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in default.

The BB- issue-level and 3 recovery ratings on Telesat's existing secured debt are unchanged.

Proceeds are expected to be used to fund its Lightspeed program (LEO constellation) through its unrestricted subsidiary.

“As a result of the additional debt, we anticipate leverage will increase by about 1.2x to about 7.5x in 2021, which we view to be credit negative and greater than our current downside threshold on the issuer credit rating (BB-/watch neg/--). At the same time, all our ratings on Telesat are unchanged and remain on CreditWatch with negative implications, where they were placed Feb 10, 2021,” S&P said in a press release.

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