TORONTO — Moody’s Investors Service said this week it has placed the long term debt ratings of Shaw Communications on review for possible upgrade.
The rating action “was prompted by the company’s ongoing strong financial performance and solid credit protection measures,” says the Moody’s release.
The review will focus on Shaw’s future prospects in the context of its business and financial strategies, management’s commitment to strong and stable credit protection measures, liquidity planning, term debt refinance plans, and cable licence renewal. Moody’s will also review Shaw’s plans to exploit its recently acquired wireless telephony spectrum and anticipates that the review will be concluded within 60 to 90 days.
The potential upgrade would affect approximately $2.7 billion of rated debt instruments, says the ratings agency.
Moody’s affirmed Shaw’s SGL-2 speculative grade liquidity rating, indicating that the company has good liquidity. Shaw has a US$440 million senior unsecured debenture due in April of 2010 (and two additional significant debt maturities in 2011).
“While Shaw has more than sufficient unused credit capacity under its C$1 billion committed revolving credit facility (committed through May 30, 2012 with $827 million available at November 30, 2008) to repay the principal amount in the event Shaw is unable to effect a refinance, it is unlikely that the company will be able to generate sufficient free cash flow with which to achieve the same outcome. Accordingly, it is likely that the SGL rating would be repositioned to SGL-3 indicating adequate liquidity as the April 2010 debt maturity approaches,” reads the release.
In a separate action, LGD assessments associated with the company’s instrument ratings were adjusted to reflect revisions to the company’s consolidated waterfall of liabilities.
Moody’s most recent rating action concerning Shaw was taken on February 28, 2007 at which time a Ba1 rating was assigned to a new debt issue. As well, on October 1, 2008, Moody’s announced that the Canadian Advanced Wireless Services Auction had no immediate impact on Shaw’s ratings.
