Top Debt & Credit Rating Agency Actions (PPL, DPZ, CX, PEPFF, ETR, FDX, EADSY, BHP)

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Today’s ratings news leads off with the downgrade by Moody’s of six Greek banks, including National Bank of Greece (NYSE: NBG). All six were lowered from ‘B3’ to ‘Caa2’. Anyone who is shocked by this has just woken up from a very long nap.

Other noteworthy companies with ratings news include PPL Corp. (NYSE: PPL), Domino’s Pizza, Inc. (NYSE: DPZ), Cemex, S.A.B. de C.V. (NYSE: CX), Entergy Corp. (NYSE: ETR), FedEx Corp. (NYSE: FDX), European Aeronautic Defence and Space N. V. (OTC: EADSY), and BHP Billiton plc (NYSE: BHP).

PPL Corp. (NYSE: PPL) received affirmation of its ‘Baa2’ rating from Moody’s on senior unsecured debt at its PPL Energy Supply subsidiary. At the same time, the agency affirmed its ‘Baa3’ rating on PPL’s issuer rating with a stable outlook. PPL is a classic defensive utility stock, with a forward dividend yield of 4.8%.

Domino’s Pizza, Inc. (NYSE: DPZ) postponed the issuance of $1.625 billion in senior unsecured notes leading S&P to withdraw its preliminary ‘BBB+’ rating on the notes. Domino’s stock price has more than doubled in the past 12 months.

Cemex, S.A.B. de C.V. (NYSE: CX) had its global scale ‘B’ rating and ‘mxBB+/mxB’ national scale corporate credit ratings placed on  CreditWatch with negative implications at S&P. One of the world’s largest cement makers, Mexico-based Cemex faces a slowdown in activity related to the weaker global economy. S&P also noted that it anticipates that Cemex “might need to renegotiate the credit conditions in its financing agreement with lenders, to avoid a covenant breach by year-end.” Cemex shares are trading up in the early afternoon today, at $3.43, in a 52-week range of $3.33-$11.15. The shares posted a new 52-week low yesterday.

Petroplus Holdings AG (OTC: PEPFF), a Swiss-based pure-play oil refiner, received a downgrade to its long-term credit rating from ‘B+’ to ‘B’ at S&P. This is interesting because Petroplus has been struggling for some time, and S&P especially notes weak refining margins in Europe and poor operating performance at Petroplus. US refiner Valero Energy Corp. (NYSE: VLO) recently purchased a refinery in the UK and one or more of Petroplus’s six European refineries may be available at an attractive price.

Entergy Corp.’s (NYSE: ETR) Entergy Louisiana LLC (NYSE: ELB) subsidiary received a ‘AAA’ rating on $207 million senior secured investment recovery bonds from S&P. The bonds are essentially risk-free because the company has an irrevocable right to recover its investment by raising rates. That’s why utility stocks are popular defensive plays.

FedEx Corp. (NYSE: FDX) and its Federal Express Corp. subsidiary received re-affirmation of issuer default ratings of ‘BBB’ from Fitch Ratings. FedEx’s senior unsecured credit facility and its senior unsecured debt were also affirmed at ‘BBB’. Fitch noted that the unsecured debt totaled $1.7 billion and the unsecured credit facility totals $1 billion. The agency’s outlook on FedEx is stable.

European Aeronautic Defence and Space N. V. (OTC: EADSY), makers of the Airbus, has had its long-term issuer default rating and its senior unsecured debt rating affirmed at ‘BBB+’ with a stable outlook by Fitch. EADS’s record backlog of 4,200 orders indicates strong revenue growth and the company’s solid cash position contributed to the rating.

BHP Billiton plc (NYSE: BHP) subsidiary Petrohawk Energy Corp. received an ‘A’ rating on its outstanding senior unsecured debt from Fitch. BHP itself had its long-term issuer default rating and senior unsecured ratings affirmed at ‘A+’. Fitch attributes the one-notch difference to the limited operational integration between mining company BHP and its newly purchased Petrohawk oil & gas business, as well as change-of-control language for the 2014-15 bonds that sets the re-purchase premium so low that few takers are expected.

Paul Ausick