Moody's upgraded Bouygues SA's long-term issuer rating and senior unsecured rating to A3 from Baa1 and revised the outlook to stable from positive, citing the French industrial group's strong operating performance and credit ratios.
The rating agency said Bouygues' EBITDA grew by 16% to €3.21 billion in 2017 and expects an annual 10% gain over the next two years. Moody's also expects the company's funds from operations to debt to rise toward 35% by 2019 from 29% in the 12 months that ended March 31.
Bouygues' telecommunications division, Bouygues Telecom SA, will generate a large share of the group's earnings growth. However, Moody's said the French telecom market remains highly competitive and the agency does not expect significant improvement for the sector in the next 18 months.
Moody's noted that the company's cash flow generation remains a constraint on its credit quality, but expects it to increase in the coming years.