Telefonica's rating downgraded by Moody's due to high debt 

International ratings agency Moody's has changed the outlook on Telefonica's long-term senior unsecured ratings ratings and its guaranteed subsidiaries from "Baa2" to "Baa3" due to its difficulties reducing a debt level that stands at around EUR 50 billion

In a statement Moody's said the change reflected Telefonica's recent decision to revise its financial strategy to pay down debt through organic free cash flow and only sell non-strategic assets on an opportunistic basis. As a result, the ratings agency said Telefonica is now unlikely to meet its previously stated deleveraging targets by December 2017, even though its recent dividend reduction is described as a step in the right direction. Moody’s added that the outlook on the ratings remains stable.

The downgrade follows Moody's warning earlier this year that Telefonica needed to significantly cut its debt by the end of the year in order to avoid "very negative" repercussions for its credit rating. The company was forced to slow down the execution of a plan to reduce debt through asset sales and the abandoned IPOs of O2 UK infrastructure subsidiary Telxius.

Source: Telecom Paper