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Eutelsat HoldCo Downgraded By Fitch From BB- to B+; Eutelsat SA (OpCo/Issuer) Notes Upgraded

COMMUNICATIONS

HoldCo Profile: Ba3[N]/B[S]/B+[N] OpCo Profile: Ba3[N]/B[S]/BB+[N]

  • Announced yest; Eutelsat SA (OpCo) assigned LT IDR of BB+[N] and senior unsecured notes upgraded to BB+ from BB-.
  • The downgrade mainly reflects covenant and cash flow restrictions enacted by the new bond which effectively ring-fences ESA and restricts its leverage and ability to circulate cash.
  • ESA now has a net leverage cap that would limit distributions at 2.75x with conditional flexibility to 3.25x – ESA see themselves just below the 2.75x limit. Fitch-adj leverage likely 0.2-0.3x higher.
  • On a group-wide basis, Fitch expect net leverage to rise >4x with MT leverage seen near 4.5x. Rating thresholds given at 4x/4.5x; also cite FCF and the removal of ESA ringfencing.
  • Fitch negatively assess the visibility and execution risks around OneWeb, in an untested LEO/GEO market with increasing pressure from Starlink, Amazon's Kuiper, and Telesat.
  • The Eutelsat 29 trades at EUR 99.1 with a yield of 9.98%, having priced at Par with a yield of 9.75% (we had seen fair value between 8.75% and 9.25%). The Eutelsat curve moved lower on the Fitch announcement with the 2028s now 70c cheaper since Friday’s close.
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