Fitch rates Kabel Deutschland

Fitch Ratings said it assigned Kabel Deutschland GmbH's proposed €1.575 billion senior notes due 2014 an expected rating of B+. The agency has also assigned a senior unsecured BB- rating to Kabel and a BB+ rating to the group's €2.6 billion senior secured credit facilities.

The outlook is stable.

The senior unsecured BB- rating reflects Fitch's balanced assessment of the business and financial risks for Kabel. The expected B+ rating reflects the notes' structural subordination to the €2.6 billion senior secured credit facilities and other obligations.

Fitch said EBITDA margins have risen to 38% in 2003 from 30% in 2001, with EBITDA minus capex more than doubling as investment levels were cut back to maintenance levels. Management expects future capital expenditure to be no more than 10% of revenues, which are seen growing broadly in line with inflation. The group faces a prospective peak net debt to EBITDA around 5.4x.

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