Moody's rates Koninklijke KPN securities Ba1

Moody's Investors Service said it assigned a provisional Ba1 long-term rating to the proposed issuance of capital securities by Koninklijke KPN NV.

The outlook is negative.

The size and completion of the hybrid debt remain subject to market conditions, Moody's said.

All of its other ratings and outlook remain unchanged.

The rating assigned to the hybrid debt is two notches below the group's senior unsecured rating of Baa2, the agency said. The two-notch rating differential primarily reflects the deeply subordinated nature of the hybrid debt, which is senior only to ordinary shares and ranks pari passu with preference shares, Moody's said.

The proceeds will be used to strengthen the company's capital structure by reducing net indebtedness, the agency said.

The ratings are supported by the company's leading position in the Dutch market and the benefits derived from its geographical diversification in Germany and Belgium, where the group operates as a mobile-centric market challenger, Moody's said.

The ratings are balanced by its relatively weak metrics for the rating category with a net debt-to-EBITDA ratio trending toward 3x, the agency said, along with a track record of declining operating performance and profit warnings.

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