EM LATAM CREDIT: Colombia Telecom: S&P Revised Outlook to Stable - Negative
(COLTEL; NR/B+/BB+)
• S&P lowered its outlook from positive to stable, cited negative free cash flow in 1H 2025 which led to a rise in debt leverage to 4.7x but they were still optimistic that Latin America telecom services provider Millicom (Ba3/NR/BB+) would succeed in completing its acquisition of Colombia Telecom from Telefonica of Spain within the next 4 to 6 months.
• COLTEL 30s were last quoted T+325bp, 136bp tighter since June 30th and 110bp tighter YTD. Colombia Telecom has operationally underperformed for years but the combination with Millicom’s Tigo-Une division could be a game-changer, so we are optimistic on the outcome as we posted earlier in the year:
https://mni.marketnews.com/3WtAhTg
• The rating agency believed that operating performance would improve in 2H, leverage would drop to 4x by end of 2025 and that the company would be able to refinance its short-term debt obligations.
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