Nortel's Credit Rating

Some much-needed good news today for Nortel Networks as the Dominion Bond Rating Service (DBRS) has removed the telecom equipment maker from its “under review” status, while confirming the ratings of some of the company's debt vehicles. That said, DBRS is still concerned Nortel's strategy on how it plans to compete and grow sales in an increasingly competitive marketplace “seems in flux” given the company's management has been distracted by accounting issues, etc. The credit rating agency also points to the growing use vendor financing as an issue – something where Nortel clearly has a limited appetite to play. “DBRS believes that going forward the company's new directors and senior management need to provide more clarity concerning future strategies. Otherwise, without meaningful growth, the company's SG&A and R&D costs will likely need to be reduced.”