Book Reviews | Gordon Campbell | News Flashes | Scoop Features | Scoop Video | Strange & Bizarre | Search


What does Moody’s downgrade of Chorus mean?

Yesterday Chorus announced Moody’s Investors Service cut the company’s credit rating. It is now sitting at Baa3. Previously it was a Baa2. Moody's also said Chorus has a negative outlook.

The change comes mainly because of the likelihood of regulated cuts to the prices Chorus can charge customers to access the copper network. Moody's also explained that Chorus faces higher capital expenditure and operating costs than it previously expected.

In the arcane language of investment ratings, Moody's Baa3 is at the bottom end of its investment grade band.

In plain English it means it now rates Chorus as a slightly more risky investment - but not a dangerous one.

This may mean Chorus will have to pay investors a slightly higher rate of interest to reflect the increased risk. In other words, borrowing could be more expensive which will in turn put yet more pressure on profits and margins.

The words 'may' and 'could' are important here, this is only a small downgrade and many institutions will have already priced the regulatory risk into their view of Chorus.

The negative outlook part of the announcement effectively says the ratings company doesn't expect the regulator - that's the Commerce Commission - to back down or otherwise change the price the company can charge in the near future.

A Moody's analyst put it this way:  “The recent NZCC (New Zealand Commerce Commission) regulatory decision regarding UBA (unbundled bitstream access) pricing will have an adverse impact on Chorus’s financial profile, with annual EBITDA (earnings before interest, tax, depreciation and amortisation) decreasing by around 20 percent from 2015 absent measures being contemplated by Chorus.

“As a consequence we expected adjusted financial leverage, measured as debt/EBITDA, will likely exceed the tolerance level set for Chorus’s Baa2 rating."

[digitl 2014]

digitl on Google+

© Scoop Media

Top Scoops Headlines


Julien Troussier: Loving Trump

It’s 3am. Cannot sleep. Restless. Slide to unlock. Open the New York Times App. Look for the latest incident. He did it again. He lashed out. Fear. Anger. Outrage. I needed to see this. I needed to check that the madness was still there. More>>


Werewolf: Living With Rio’s Olympic Ruins

Mariana Cavalcanti Critics of the Olympic project can point a discernible pattern in the delivery of Olympics-related urban interventions: the belated but rushed inaugurations of faulty and/or unfinished infrastructures... More>>

Gordon Campbell: On The Politicising Of The War On Drugs In Sport

It hasn’t been much fun at all to see how “war on drugs in sport” has become a proxy version of the Cold War, fixated on Russia. This weekend’s banning of the Russian long jumper Darya Klishina took that fixation to fresh extremes. More>>


Keeping Out The Vote: Gordon Campbell On The US Elections

I’ll focus here on just two ways that dis-enfranchisement is currently occurring in the US: (a) by the rigging of the boundary lines for voter districts and (b) by demanding elaborate photo IDs before people are allowed to cast their vote. More>>

Live Blog: Open Source//Open Society Conference

The second annual Open Source Open Society Conference is a 2 day event taking place on 22-23 August 2016 at Michael Fowler Centre in Wellington… Scoop is hosting a live blog summarising the key points of this exciting conference. More>>


Open Source / Open Society: The Scoop Foundation - An Open Model For NZ Media

Access to accurate, relevant and timely information is a crucial aspect of an open and transparent society. However, in our digital society information is in a state of flux with every aspect of its creation, delivery and consumption undergoing profound redefinition... More>>

Ramzy Baroud: Being Black Palestinian - Solidarity As A Welcome Pathology

It should come as no surprise that the loudest international solidarity that accompanied the continued spate of the killing of Black Americans comes from Palestine; that books have already been written and published by Palestinians about the plight of their Black brethren. In fact, that solidarity is mutual. More>>


Get More From Scoop

Top Scoops
Search Scoop  
Powered by Vodafone
NZ independent news