S&P cuts Eutelsat loans to junk

Standard & Poor's said it lowered its long-term corporate credit and senior unsecured bank loan ratings on Eutelsat SA to BB from BBB+ following news that the company will undergo a leveraged refinancing of its shareholder vehicles.

The corporate credit rating remains on CreditWatch negative, while the CreditWatch implications on the senior unsecured bank loan rating have been revised to developing from negative.

At the same time, S&P lowered its short-term corporate credit rating on the company to B from A-2 and removed it from CreditWatch. All ratings were initially placed on CreditWatch on March 7, 2004.

S&P said the rating actions reflect the significant increase in leverage that will result from Eutelsat's substantial debt-financed dividend payments to existing shareholders, thereby switching the company's capitalization into a highly leveraged financial structure from the sound one currently in place.

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