Telecom shrugs off rating downgrade

Friday 21st June 2002

A credit rating downgrade on Monday by Moody's Investors Service left Telecom's share price unmoved by Wednesday as the cut had already been factored in by the market.

Moody's cited the continuing underperformance of Telecom's Australian operations, counter-balanced by its strong leading position in New Zealand.

Telecom chief financial officer Marko Bogoievski said he was disappointed by the downgrade but Telecom's ability to raise debt wouldn't be affected significantly.

The overall "issuer rating" fell from A1 to A2. Analysts said the results of the review, begun in March, had been anticipated. The share price rise soon after the news was probably caused by the market having factored in the threat of a two-notch ratings cut. Meanwhile, a Commerce Commission inquiry into interconnection pricing between Telecom and rival TelstraClear has been approved.

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