S&P lifts Kabel Deutschland from junk

Standard & Poor's said it raised the long-term corporate credit rating on Kabel Deutschland Holding AG to BBB+ from BB.

The agency also said it removed the rating from CreditWatch with positive implications, where it was placed Aug. 2.

S&P also said it raised the rating on the company's €700 million senior secured notes due 2018 to BBB+ from BB+ and the rating on the €400 million senior notes due 2017 to BBB from B+.

The agency also said it withdrew the recovery ratings on these instruments.

The outlook is stable.

The upgrades primarily reflect the anticipated considerable reduction in Kabel's external financial leverage, S&P said, and its closer operational and legal integration into the Vodafone group after the completion on Oct. 14 of Vodafone's acquisition of a 76.57% stake in Kabel.

The repayment of the bank loans and the further de-leveraging anticipated in the next 12 months significantly strengthens the company's financial risk profile, which is assessed as modest, the agency said.

The company's financial risk profile will remain somewhat constrained by the group's limited free operating cash flow generation due to substantial capital expenditure for additional infrastructure investments in fiscal 2014 and 2015 and ongoing significant subscriber acquisition costs, S&P said.

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