S&P rates Kabel Deutschland

Standard & Poor's said it assigned its BB- long-term corporate credit rating to German cable TV operator Kabel Deutschland GmbH.

The outlook is stable.

At the same time, S&P assigned its B debt rating to the company's euro- and U.S. dollar-denominated senior unsecured notes offering for the equivalent of €700 million, maturing in 2014, and its BB- debt rating and 2 recovery rating to Kabel Deutschland's senior secured bank loan of up to €2.6 billion with final maturity in 2013.

S&P said Kabel Deutschland's ratings reflect the company's position as a leading, but highly leveraged, cable TV operator in Germany. The chief rating supports are the company's stable core analog TV revenues - which benefit from certain utility characteristics - manageable capital expenditures, and positive free cash flow generation.

The company is constrained, however, by its high leverage, strong price regulation, and increasing competition - both from various technology platforms and from Level 4 operators that own the direct access to a significant portion of its customer base. Kabel Deutschland's ratings are also predicated on expectations that the interest rate on the notes will not exceed 11%.

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