Jul 26, 2002 : Moody's Cuts Telus Ratings to "Junk"
📅 - New York-based debt ratings agency Moody's Investors Service cut Canadian telecommunications carrier Telus Corp.'s credit ratings to "junk" on Thursday, causing the company's stock and bonds to fall.
Moody's cut its ratings for Telus, based on concerns over the company's ability to pay down its C$9 billion in coming years, and risks involved in its plan to cut 20 percent of its workforce.
According to analysts, the ratings drop will mean a lowering of the company's ability to borrow, and could raise questions about the effectiveness of the Telus management team.
Telus shared dropped following the news, closing down C$2.15, more than 23 percent, at $7 per share on the Toronto Stock Exchange on Thursday, reaching as low as C$6.41 at one point. Investors sold Telus debt, driving down the yield of the company's bonds.
The rating could make borrowing more difficult for Telus, as many investment funds are not allowed to hold the debt of companies that are rated below investment grade.
Telus said the decision would have a minimal impact because the company does not intend to issue new debt, and has already financed its business plan.
"TELUS Corporation finds this rating downgrade to be unwarranted at this time, and not consistent with our business fundamentals or our financial position and outlook," said Robert McFarlane, Telus's chief financial officer.
Moody's cut its ratings for Telus, based on concerns over the company's ability to pay down its C$9 billion in coming years, and risks involved in its plan to cut 20 percent of its workforce.
According to analysts, the ratings drop will mean a lowering of the company's ability to borrow, and could raise questions about the effectiveness of the Telus management team.
Telus shared dropped following the news, closing down C$2.15, more than 23 percent, at $7 per share on the Toronto Stock Exchange on Thursday, reaching as low as C$6.41 at one point. Investors sold Telus debt, driving down the yield of the company's bonds.
The rating could make borrowing more difficult for Telus, as many investment funds are not allowed to hold the debt of companies that are rated below investment grade.
Telus said the decision would have a minimal impact because the company does not intend to issue new debt, and has already financed its business plan.
"TELUS Corporation finds this rating downgrade to be unwarranted at this time, and not consistent with our business fundamentals or our financial position and outlook," said Robert McFarlane, Telus's chief financial officer.
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