Event
DBRS Hosts Teleconference on BCE and Bell Canada
- Conference Call
-
- Telecom/Media/Technology
- Toronto
- Sep 26, 2007
- 2:00 p.m. ET
Details
DBRS will host a teleconference on Wednesday, September 26, 2007, at 2:00 p.m. ET to discuss its position with respect to the ratings of BCE Inc. (BCE) and its wholly owned subsidiary, Bell Canada. The call will be led by Managing Director Paul Holman and analysts Grant Dawson and Jamie Wetmore. (See below for details on how to participate in the teleconference.)
DBRS notes that the outcome of the BCE privatization process is now all but certain. BCE has completed the shareholder vote where the proposed transaction was approved by an overwhelming majority of the shareholders and the Competition Bureau has formally indicated that it will not review the transaction. The major milestones prior to closing are regulatory approvals and the formalization of the closing conditions and funding on the part of the buyers. DBRS expects the process to be fully completed by the second quarter of 2008 if not sooner.
DBRS believes that default risk is the most appropriate focus in assessing the ratings of corporate bonds. However, in instances where there exists a material level of security attached to a debt issue, DBRS believes consideration of both default expectations and recovery in default assessments should be considered during the ratings process.
“In such cases,” says Mr. Holman, “DBRS first determines an Issuer Rating for the entity in question, which is the rating opinion of the unsecured debt of the issuer, and then assesses the recovery expectations in a default scenario for each secured issue. DBRS may notch a rating up depending on recovery expectations for a specific security relative to the overall average recovery rate for unsecured debt. To complete the exercise, DBRS requires full and complete information with respect to the security being attached to a debt issue.”
DBRS notes that there is insufficient information available to make final determination on some of the BCE and Bell Canada ratings. The BCE proxy circular contains information that has allowed DBRS and others to understand in some detail the post-closing credit profiles of the debt issuers and the security and guarantees that may apply to some debt issues. Additionally, DBRS obtains information from management and others in the course of its review. Notwithstanding the available information, DBRS will complete its review when more detailed and complete information can be provided with respect to the security agreements, the collateral and the forms of guarantees that result as the transaction is documented. DBRS believes that such factors could have an impact on the final rating of some debt issues and will therefore not take a formal rating action in this regard until all information can be considered. “Indicative ratings will be provided as information becomes available,” explains Mr. Holman, “and final ratings will be assigned at closing.”
DBRS expects to monitor the progress of the BCE transaction as it moves toward a close and to be in a position to fully and completely consider all elements of each security. As this information is obtained and assessed, DBRS will provide an indication of its expected rating before closing, with the completion of the review and finalization of the rating on closing of the transaction.
To participate in the teleconference, please dial the appropriate numbers listed five minutes before the 2:00 p.m. ET start time on Wednesday, September 26, 2007.
Local callers: +1 416 641 6136
North American callers (toll-free): +1 866 300 4047
International callers (toll-free): +1 800 6578 9898
Please quote confirmation code 3237512# when registering for the call.
For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.