Eircom bust was first case of its kind in Europe
THE collapse of Eircom into insolvency was the first case of its kind in Europe, according to rating agency Moody's.
The bankruptcy of a telecoms incumbent has significant lessons for all telecoms investors in Europe, Moody's said. The agency has "rated" Eircom's debt since 2001, a role that gave it access to the company's books and a huge insight into the business over the period.
Last night it published a wide ranging report into the collapse into examinership. The insolvency of Eircom is the first time for any telecoms "incumbent" anywhere in Europe.
Moody's said it's proof telecoms companies can no longer be considered to have systemic importance, noting that the Government made no move to bail out or nationalise the troubled company.
"Unlike banks, telecoms do not have systemic importance and are less likely to be bailed out or nationalised in times of stress," the report notes.
The Eircom examinership is the biggest corporate insolvency anywhere in Europe this year.
Eircom's bond holders face a total wipe out under a plan to write off €1.7bn of Eircom's nearly €4bn of debt.
Moody's only cut its credit rating for Eircom to the lowest rank above default last year, but the report suggests investors did get some warning from the agency.
Moody's lowered Eircom's credit rating eight times before the business became insolvent, the report points out. The rating dropped each time new debt was piled on to the business, Moody's said.