SBB - comment

The rating cut by S&P from BB+ to BB- referenced covenant compliance issues due to accounting changes. The covenant language in the EMTN documentation interest cover is open to interpretation. SBB will argue that its methodology has been consistent for some years without any investor objection. S&P cuts through this by saying the change in presentation reduces transparency. In the event of a change of control at SBB, the investor put option is only operative if there is a resultant rating downgrade. A lower starting rating from S&P may not be all bad for SBB, its rating is of less importance than its survival.