Nokia (NOK) Jumping Into Alcatel (ALU) Deal Could Pressure Corp. Ratings - Danske Bank
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Danske Bank’s Louis Landeman, during a recent interview, said Nokia and Alcatel in a tie-up would hamper the positive momentum that Nokia is seeing in its credit ratings. The outcome might be slight downgrade or stabilization at current levels.
Currently, S&P, Fitch, and Moody's all have Nokia's credit ratings under review following recent M&A activity. Landeman thinks that it is unlikely that the ratings agencies will take action before the company is done with its strategic review.
Nokia spreads might widen depending on how a deal is structured. Right now, Alcatel's ratings are vulnerable given that it is going through a major restructuring and is having trouble generating stable free cash flow.
Moody's is at B1, Fitch is at BB-, and S&P is at B+ on Nokia. Shares are indicated lower Thursday.
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