Bulletin: Spark New Zealand Might Face Difficult Dividend Decision

MELBOURNE (S&P Global Ratings) Aug. 26, 2020--S&P Global Ratings said today that limited rating headroom, coupled with some weakness in top-line trends, will make it difficult for Spark New Zealand Ltd. (A-/Stable/A-2) to maintain its historical dividend level at the 'A-' rating level. This is despite our view of the company's overall resilience to COVID-19 operational and financial disruptions. The company has now absorbed most of its financial headroom at the 'A-' rating level. As of June 30, 2020, the company's debt-to-EBITDA ratio stood about 1.67x (after preliminary S&P Global Ratings' adjustments), marginally below our current downward trigger of 1.7x. In our opinion, partial debt funding of Spark's dividend has become unsustainable. To this end, we view the company's adoption

...August 26, 2020 MELBOURNE (S&P Global Ratings) Aug. 26, 2020--S&P Global Ratings said today that limited rating headroom, coupled with some weakness in top-line trends, will make it difficult for Spark New Zealand Ltd. (A-/Stable/A-2) to maintain its historical dividend level at the 'A-' rating level. This is despite our view of the company's overall resilience to COVID-19 operational and financial disruptions. The company has now absorbed most of its financial headroom at the 'A-' rating level. As of June 30, 2020, the company's debt-to-EBITDA ratio stood about 1.67x (after preliminary S&P Global Ratings' adjustments), marginally below our current downward trigger of 1.7x. In our opinion, partial debt funding of Spark's dividend has become unsustainable. To this end, we view the company's adoption of a dividend guidance range of 23 to 25 cents per share as appropriate in light of the increased uncertainty and upcoming spectrum renewal. The decision to reactivate its dividend reinvestment...

Bulletin