Moody’s Upgrades Eutelsat’s Rating on French Government Stake, Capital Boost
Moody’s Ratings has upgraded Eutelsat Communications SA’s long-term corporate family rating to Ba3 from B2, the rating agency announced Monday.
The upgrade reflects two key factors:
- Government-Related Issuer (GRI) Status: The rating action acknowledges Eutelsat as a Government-related Issuer following the French State’s acquisition of a 29.65% stake, making it the largest shareholder. This resulted in a one-notch uplift, according to Ernesto Bisagno, Moody’s Vice President and lead analyst for Eutelsat.
- Improved Credit Metrics: The upgrade also reflects expected improvements in credit metrics following a major capital raise.
Capital Raise Details
The upgrade follows Eutelsat’s announcement of a €1.5 billion capital raise, which included:
- A reserved issuance on November 21, which raised €828 million at €4.00 per share.
- A €670 million rights issue, priced at €1.35 per share, which will run until December 9. Core shareholders have already committed approximately 71% of this offering.
Following these steps, the French State will become Eutelsat’s largest shareholder with the 29.65% stake.
Financial Outlook and Debt
- Debt Ratios: Reported net debt to EBITDA is expected to decline significantly, from 3.9x in fiscal year 2025 to around 2.5x in fiscal year 2026.
- Unsecured Debt Upgrade: Moody’s also upgraded the ratings on senior unsecured debt instruments issued by Eutelsat SA to Ba3 from B1. This applies to three sets of €600 million notes maturing in July 2027, October 2028, and April 2029.
- Long-Term Guidance: Eutelsat reiterated its guidance for total revenue to increase to €1.5-1.7 billion by fiscal year 2029, representing a compound annual growth rate of approximately 6.6%. The company also expects its EBITDA margin to improve to at least 60%, up from 54.4% in fiscal 2025.
- Capital Expenditure: Moody’s anticipates Eutelsat will generate negative free cash flow of around -€500 million annually on average over 2026-2028 due to substantial planned investments:
- €2 billion between 2025 and 2029 for its Low Earth Orbit constellation (OneWeb).
- An additional €2 billion from 2028 for the IRIS 2 program.
Stable Outlook
The stable outlook reflects Moody’s expectation that Eutelsat will stabilize its earnings profile over the next 12-18 months. This stabilization is anticipated to be driven by the ramp-up of its Low Earth Orbit operations through OneWeb and a stronger contribution from government services.