(Jamaica Gleaner) Investors can buy telecommunications company Digicel bonds at roughly 30 per cent cheaper than in January this year as downgrades put pressure on prices.
The discounted prices have created yields above 30 per cent. But the relatively high yield comes with concerns, according to Fitch, an American credit rating agency which downgraded the telecoms two weeks ago. The agency referenced weak liquidity, unsustainable capital structure, imminent refinancing risk and stagnant operational performance as reasons for the downgrade.
“Fitch expects that Digicel will have to restructure debt at multiple levels in the next 12 to 18 months, due to the group’s unsustainable capital structure and imminent refinancing risk,” added Fitch in a notice dated November 20.
The bonds lost roughly 10 per cent in price following the downgrade but are now mid-way recovered.
When contacted, Digicel declined to comment on the matter.
