Research Update: BCE Inc. Downgraded To 'BBB' From 'BBB+'; Outlook Stable; Debt Ratings Lowered

Canada-based telecom services provider BCE Inc.'s debt-to-EBITDA ratio (S&P Global Ratings adjusted) weakened to 3.8x as of June 2024, which is beyond our downgrade threshold of 3.25x. We expect adjusted debt leverage to remain elevated through 2026 amid rising competitive risks, ongoing capital investments, and growing dividends, which could keep debt leverage elevated at the 3.5x-3.7x area for the next 24 months. BCE management has indicated its desire to reduce leverage by 2026 through noncore assets sales and other corporate initiatives; however, the timeliness and magnitude of these actions is uncertain. As a result, we lowered our issuer-credit ratings on BCE and its subsidiaries to 'BBB' from 'BBB+' At the same time, we lowered the issue-level ratings on Bell Canada's

...- Canada-based telecom services provider BCE Inc.'s debt-to-EBITDA ratio (S&P Global Ratings adjusted) weakened to 3.8x as of June 2024, which is beyond our downgrade threshold of 3.25x. - We expect adjusted debt leverage to remain elevated through 2026 amid rising competitive risks, ongoing capital investments, and growing dividends, which could keep debt leverage elevated at the 3.5x-3.7x area for the next 24 months. - BCE management has indicated its desire to reduce leverage by 2026 through noncore assets sales and other corporate initiatives; however, the timeliness and magnitude of these actions is uncertain. - As a result, we lowered our issuer-credit ratings on BCE and its subsidiaries to '###' from '###+' - At the same time, we lowered the issue-level ratings on Bell Canada's senior unsecured debt to ### from ###+ and subordinated debt to ###- from ###. The short-term rating is affirmed at 'A-2'. We also lowered the ratings on BCE's global scale preferred shares to '##+' from '###-'....

Research Update