Standard & Poor's has downgraded Sky from B- to CCC+ and put the DTH operator on credit watch with negative implications. In recent weeks S&P cut the ratings of Globopar and Net Serviços to D, which stands for default. According to the rating service, although News Corp. has undertaken to honor Sky?s debt obligations in Brazil until the end of 2003, there is no guarantee it will do so and Sky?s operating results are still bad despite moderate improvement. ?Support from News Corp. is uncertain, since Latin America may not be a relevant market for the company,? says the report, which highlights concerns about debt maturing in 2004. ?The company?s operating losses have systematically diminished, but more sustainable profitability will depend on Sky?s ability to grow its subscriber base. The company?s growth prospects, however, are hindered by negative forecasts for Brazil in 2003 and by limited access to capital,? says S&P?s report.
Crisis
