Batelco Yield Jumps Most Since June on S&P Junk Rating Prospect

Bahrain Telecommunications Co.’s bonds declined, pushing the yields up the most in three months, after Standard & Poor’s said the phone operator’s rating may be cut to junk.

The yield on the 4.25 percent, $650 million bonds maturing in May 2020 jumped 36 basis points, the most since June 24, to 6.18 percent at 2:11 p.m. in Manama, the capital of Bahrain. The company known as Batelco sold the bonds in April to fund the purchase of Cable & Wireless Communications Plc’s Monaco and islands businesses. S&P placed Batelco’s BBB- rating, the lowest investment grade, on credit-watch negative.

Batelco is “suffering a greater loss of market share and reduction in margins than we anticipated,” S&P analysts, led by London-based Hina Shoeb, wrote in a research note today. “Higher market competitiveness suggests to us that the importance of Batelco’s role in Bahrain as a provider of key communications infrastructure may be decreasing.”

The state-controlled company in December said it will buy CWC’s business for $680 million as it sought to diversify from the home market. Batelco reported a 22 percent drop in first-half profit due to expenses linked to the acquisition and related financing.

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