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Moody’s downgrades Vivendi’s outlook to negative

Moody's said the rating action reflects the deterioration in Vivendi's business profile and leverage metrics following the proposed distribution of 60 per cent of UMG's share capital to Vivendi's shareholders

Ratings agency Moody’s has downgraded French conglomerate Vivendi’s outlook from stable to negative.

The rating change has been driven by Universal’s announcement it intends to spin out Universal Music Group.

“We have changed the outlook to negative to reflect the weakening of Vivendi’s business profile as it is spinning off its most valuable asset, while its gross leverage will be high for the rating in 2021 and 2022,” said Agustin Alberti, VP and lead analyst for Vivendi at Moody’s.

“However, the rating affirmation reflects our view that the company (1) holds strong market positions in the remaining businesses it operates, (2) is still assessing its final capital structure post transaction and could take the necessary actions to reduce leverage to levels in line with the Baa2 rating, and (3) has a valuable portfolio of listed assets well in excess of its debt,” added Alberti.

Vivendi remains locked in a battle with Mediaset over the Italian broadcaster’s plans to press ahead with its planned pan-European media company. It also appealing against the Italian regulator’s investigation into its stakes in both Mediaset and Telecom Italia.