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S&P lowers Intelsat rating

Ratings agency Standard & Poor’s is following on from Moody’s with a lowered opinion of Intelsat’s position.

S&P confirms its “1” recovery rating for its new batch of $1.25 billion of ‘senior secured’ fresh debt (which suggests that S&P “indicates our expectation for a very high recovery – 90 per cent -100 per cent of the principal in the event of a payment default”.

However, S&P lowered its rating on Intelsat’s senior unsecured guaranteed notes from CCC+ to CCC, and saying: “The revised recovery rating reflects the greater amount of secured debt outstanding from the current transaction, which dilutes the recovery prospects for the unsecured guaranteed debt.”

S&P adds: “In our view, the new debt issuance is Intelsat’s first step in addressing its intermediate-term debt maturities, including its $450 million revolving credit facility maturing in 2017 and its $475 million 6.75 per cent senior notes at Intelsat Luxembourg due in 2018.”

Standard & Poor’s says that the extra debt means that Intelsat is less likely to be able to pay its 100 per cent obligations on existing unsecured debt.

The market expects Intelsat to wrap up its debt issue by early next week.

Earlier this week Moody’s placed some of Intelsat’s debt within its category of “highly speculative, of poor standing, subject to very high default risk”.

Intelsat’s share price fell 5.14 per cent by end of business on March 23rd.

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