HONG KONG (S&P Global Ratings) Aug. 7, 2019--S&P Global Ratings said today that Tencent Holdings Ltd.'s preliminary discussions with Vivendi S.A. to acquire a 10% stake in Universal Music Group (UMG) will not significantly affect our leverage forecast for Tencent (A+/Stable/--). We believe the investment could strengthen Tencent's content platforms, including Tencent Music Entertainment Group, a majority-owned subsidiary of Tencent. Should Tencent fully fund the transaction, its adjusted net debt-to-EBITDA could increase to 0.6x-0.8x from our current base case of 0.4x-0.6x for fiscal 2019. However, the leverage impact could be significantly less if Tencent pursues a co-investment funding strategy similar to other large investments it has made in past years, such as for Supercell Oy and Wanda Commercial Management Group.
