Moody’s has downgraded the credit rating of numerous South African companies, including MTN.
MTN has been assigned a Ba1 corporate family rating and a Ba1-PD probability of default rating. Moody’s has also withdrawn MTN’s long-term Baa3 rating.
Moody’s said its outlook has changed from stable to negative, and the new rating assignment was driven by the downgrade of the South African sovereign bond ratings to Baa3 negative.
“In the absence of improving credit profiles within the major markets in which MTN operates (such as South Africa, Nigeria, Iran, and Ghana), MTNs rating is unlikely to be upgraded to Baa3,” said Moody’s.
“However, Moody’s would consider an upgrade if MTN re-establishes a track record of dividends being up-streamed from key markets such that total debt to EBITDA on a consolidated or at MTN holdings level were to trend towards 1.5x and MTN’s consolidated EBITDA margin was on an improving trend.”
Moody’s also downgraded the credit ratings of Eskom, Sasol, and Airports Company South Africa.
The ratings agency said the downgrades reflect the weakening of the sovereign rating credit profile, following the downgrade of South African government bond ratings.