Standard & Poor's (S&P) downgraded its expectations for revenue and cash flow growth at Spanish telecoms giant Telefónica (NYSE: TEF) and lowered to BBB+ from A- the company's long-term corporate credit rating, the ratings agency said in a statement.
S&P said Telefónica's rating outlook is stable.
The downgrade reflects a revision of Telefónica's growth prospects as a result of challenges in its home market in Spain, and S&P's view of increased regulatory risks in some Latin American markets, as well as an aggressive dividend policy, according to the agency.
"Because of these factors we think that debt deleveraging will fall short of our previous expectations," S&P said. But the stable outlook reflects that positive traction from growing markets in Latin America will likely continue to cushion macroeconomic pressures in Spain.
Any failure to maintain an adequate liquidity profile, large debt-financed acquisitions or unexpected adverse market developments - such as recurrent large regulatory effects or a significant worsening in Spain's market - could pressure ratings.