Moody’s leaves MTN’s rating unchanged
This comes after SA’s sovereign rating was downgraded to junk status in March
Moody’s Investors Service has left MTN’s Ba1 rating unchanged, even as it downgraded SA’s sovereign rating last week, MTN said on Monday.
The telecom operator said Moody’s also left the negative outlook unchanged to reflect the exposure to weakening sovereign credit quality in some of MTN’s key markets such as SA (Ba1 negative) and Nigeria (B2 negative).
Moody’s decision to affirm the rating is because it believes the company’s healthy credit metrics and good liquidity will help absorb the impact of the domestic macroeconomic environment’s deterioration, MTN said.
S&P Global Ratings recently said MTN is at risk of having its debt downgraded in the next 12 months if the mobile network operator increases its relative exposure to Nigeria.
Nigeria is Africa’s biggest oil producer and a drop in prices will weigh on the West African economy. The country is MTN’s most profitable market, accounting for one third of its annual profit. A drop in profitability there would likely have an impact on the group as a whole.
SA was dealt another blow late on Friday when Fitch Ratings downgraded the country further into junk, just a week after Moody’s stripped it of its last remaining investment grade.
Fitch said it had cut SA one notch to BB from BB+ because the country lacked a “clear path towards” stabilising its debt position, a situation that would be worsened by the effect of the Covid-19 shock on economic growth and public finances.
The downgrade, together with the Covid-19 crisis, are factors that MTN’s management are likely to be keeping an eye on.