S&P Global said it has raised its corporate credit rating on Mediacom Communications to BBB with a stable outlook, two notches above its previous rating of BB+ and spurred by the cable operator’s commitment to debt reduction.
Mediacom has consistently reduced debt, lowering its debt-to-EBITDA ratio to 2.4 times in the past 12 months, well below S&P’s upgrade trigger of 3 times cash flow, the credit rating agency said in a press release.
In addition, S&P noted that Mediacom chairman, CEO and controlling shareholder Rocco Commisso has committed to keeping the company’s leverage ratio below 3 times “which provides us with greater clarity into Mediacom’s financial policy and potential for re-leveraging,” S&P said in the release.
S&P said it has reassessed its ratings action triggers to better reflect its more favorable view of the telecom, cable and media business.
An investment grade rating generally means that a corporate bond has a low risk of default. For a company, that usually means better access to capital and lower interest rates.
“Our ready access to the financial markets and our low cost of debt capital clearly reflect that we have been granted investment grade treatment by investors for the past several years,” Commisso said in a separate press release. “I am pleased to see S&P also acknowledging, with a ‘double upgrade,’ that Mediacom has earned this enviable credit rating, given its strong operating performance, high quality credit metrics and rigorous financial discipline.”
In the second quarter, Mediacom added about 47,000 broadband customers, more than three times its additions in the prior year, while video subscriber losses remained stable at about 17,000. Revenue for the period was up 3% to $528.5 million and adjusted OIBDA rose 8% to $218.1 million.