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. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 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.

A number of developments had fostered the belief that the whole sector was getting back on track and the bulk of the bad news was over.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

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