The Standard & Poor's (S&P) ratings agency has downgraded its credit rating for UK-based telecommunications company Optimum Communications due to concerns over the firm's debt levels. The downgrade, which affects around GBP 100m worth of bonds issued by the company, has been triggered by a significant increase in Optimum's debt-to-asset ratio.
According to S&P, Optimum's debt-to-asset ratio has risen to 75% from 50% in 2020. This rise in debt levels has led S&P to re-evaluate its rating for the company, citing uncertainty over Optimum's ability to meet its financial obligations.
The downgrade comes as a blow to UK investors who have invested heavily in Optimum Communications' bonds. While the impact on individual savers is likely to be limited, it may lead to increased borrowing costs for the company, which could potentially affect its bottom line.
Optimum Communications has stated that it will continue to work towards reducing its debt levels and improving its financial position. However, the downgrade by S&P has sparked concerns over the long-term viability of the company's business model.
In a statement, an S&P spokesperson said: 'The downgrade reflects our view that Optimum Communications' debt profile is increasingly challenging, and we expect the company to face difficulties in servicing its debt obligations.'