Inside Comcast’s Efforts to Reduce Its Debt Levels

Comcast’s rising debt levels

Comcast’s (CMCSA) long-term debt at the end of the second quarter of 2018 was $61.9 billion, up from $57.2 billion in the prior year’s quarter. The cable giant is looking to raise cash through a bond sale worth $27 billion for its $40 billion acquisition of Sky, which would further burden the company. The addition of Europe’s (EFA) broadcaster Sky will reportedly raise the company’s debt level to $114 billion.

Inside Comcast’s Efforts to Reduce Its Debt Levels

Comcast focuses on maintaining its credit score and debt levels

Despite Comcast’s debt sale of $27 billion, which was one of the biggest US (SPY) corporate borrowings of all time, the US broadcaster reportedly committed on October 2 to maintain its credit score and debt levels. Comcast will likely keep its credit rating of A- and A3 by S&P Global Ratings and Moody’s Investors Service, respectively.

Comcast also wants to manage its debts level at 2.2 times its EBITDA. But if it acquires all of Sky, its debt would rise to 3.7 times its EBITDA, according to S&P Global Ratings.

On October 1, Comcast decided to terminate its share repurchase program to focus on debt reduction. Last year, it spent $2.9 billion on dividends and $5.4 billion on buybacks. Stopping share repurchases for one year could provide enough money to bring its debt levels in line with its peers amid the $40 billion Sky acquisition.