Telecom Italia stock rises despite rating downgrade to junk
Analysts dismiss Moody's downgrade, Blackrock takes 5.13% stake09 October, 12:59
TI stock plummeted 2% when trading opened, but by 11:40 it was up 2.5% to 0.63 euro per share on the Milan bourse.
The Moody's rating agency on Wednesday lowered its credit rating for Italy's largest phone company below investment grade to Ba1.
Moody's stated in its motivations for the rating cut that the recent resignation of former TI chairman Franco Bernabe', whose wish to strengthen the company through a capital increase was not shared by shareholders represented on the board, increased uncertainty and risk for the company in the absence of a new strategy spearheaded by a chief executive.
Analysts at Kepler kept its 'buy' recommendation, maintaining that TI shares were still a bargain, and Bernstein Research dismissed Moody's move as having little impact.
The market also took Moody's judgment in stride as news emerged that TI had a new significant shareholder - Blackrock, the world's largest asset manager, which now has a 5.13% stake in the ex-State monopoly.
TI's largest shareholder remains Telco, with 14.78%. Telco shareholders recently hammered an agreement for a change of hands that will place it, in a series of steps, under the control of Spain's Telefonica. TI responded to Moody's rating downgrade with a statement saying, ''the group is solid on a financial and industrial plain''.
TI also highlighted its strong cashflow, with a liquidity margin of 12.8 billion euros and a profitability that is ''among the highest in the sector''.