Brazil’s Globo Makes Investment Grade

S&P has raised Brazilian media conglomerate Globo Comunicacao e Participacoes to BBB- (stable) from BB+ to reflect its increased confidence in the resilience of Globo’s financial performance despite competition. “While Globo’s business profile, with its dependence on advertising revenues and exposure to cost inflation, will be a constraint on the rating going forward, we believe that the company’s financial strength will remain fairly stable in the medium term,” the agency says. Globo is supported by a dominant position in Brazil’s broadcast TV market, featuring programming with considerable levels of self-produced content, a leading position in production of local-language pay-TV content, and strong financial metrics, S&P adds. “These positives help mitigate the risks derived from the concentration of Globo’s revenues and cash generation on TV broadcasting,” the agency says. It also worries about a mismatch between BRL cashflow and USD debt.