S&P assigns ‘B plus’ rating to bond issue scheduled by RCS&RDS

Standard&Poor’s Ratings Services agency on Friday granted a long-term rating ‘ B’ to telecom operator RCS&RDS, which it simultaneously placed under review with positive implications, the agency informs.

Also, S&P assigned a ‘ B plus’ rating to a bond issue worth 200 million RCS&RDS scheduled. According to Standard&Poor’s, the placement under review with positive implications of the RCS&RDS rating reflects the agency’s outlook that if the bond issue is going to be successful the company rating increases from ‘B’ to ‘B plus’.

‘RCS&RDS rating is constrained, in our opinion, by increasing competition on the main markets it operates on, Romania and Hungary, with the players offering more and more integrated packages to attract customers’, Standard&Poor’s analyst Michael O’Brien explained.
Moreover, RCS&RDS is exposed to several markets in Central and Eastern Europe that have recently acknowledged considerable economic volatility and of the exchange rate, which could affect the company’s future growth. More than that, RCS & RDS needs to re-finance a significant level of its debt.

However, the rating is backed by RCS&RDS leadership position on the pay TV market in Romania and Hungary. Moreover, S&P considers that RCS&RDS has the advantage of a substantial opportunity for growth on the integrated services market in the two aforementioned countries.
Also, the company has already completed a series of investments and upgrades of the network, which means its cash flow should improve in 2010.The rating agency is expected to deal with the placing under review once the bond issue is completed or, in case the issue is postponed or canceled, in the following three months.

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