The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Mind the step up

Just when bond investors thought it was safe to go back into the telecom sector, Moody's dropped a bombshell. By downgrading British Telecom's long term debt two notches to Baa1 last month, it threw a sector showing glimmers of recovery into disarray. Most astonishing to investors and galling to BT's management was the fact that Moody's chose May 10, the day BT announced its rights issue - the lynchpin of its debt reduction plans - to break the bad news, fuelling speculation that it was privy to particularly damming information about the company.

It wasn't that the market hadn't expected the downgrade at all - earlier that day, Standard&Poor's had taken BT down a peg to A- and placed it on negative outlook - but the severity of Moody's action caught it off guard. BT had been making all the right noises: besides committing to the largest ever rights issue, expected to raise £5.9 billion, it had made progress with the demerger of BT Wireless, found a buyer for Yell, its directories business, appointed a new CEO and suspended dividend payments for the year.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to and analysis and receive expertly-curated updates direct to your inbox.


Already a user?

Login now


We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree