VMEDO2 - comment

Investors are familiar with the name and the strategy of sending any excess cash to the parent, so the downgrade at VMED (from BB- to B+) will only have a small impact on its cost of debt. However, S&P has also warned that any decision by VMED to sell the network would negatively impact the rating. We assess that VMED may invite infrastructure investors into the network business whilst continuing to retain control.