Moody’s Upgrades Vodafone Hybrid Debt Ratings to Baa3

Moody’s Ratings has upgraded four hybrid debt securities issued by Vodafone Group Plc (NASDAQ: VOD) to Baa3 from Ba1, following amendments to the instruments’ terms and conditions announced by the telecommunications group. The rating outlook for Vodafone remains stable.

The affected Vodafone hybrid bonds include a GBP500 million hybrid due in 2086 and callable in 2031, a EUR750 million hybrid due in 2084 and callable in 2029, a EUR1 billion hybrid due in 2080 and callable in 2030, and a EUR500 million hybrid due in 2078 and callable in 2028. The first two securities were issued in 2023, while the others were issued in 2020 and 2018, respectively.

Following the upgrade, the four Vodafone hybrid securities are now rated one notch below the company’s Baa2 senior unsecured debt rating, compared with a two-notch difference previously.

The instruments remain subordinated to Vodafone’s senior debt obligations but rank ahead of all classes of share capital and certain USD-denominated hybrid securities that were not covered by the amendments. They also include a five-year limit on coupon deferrals.

Moody’s said the upgraded bonds now rank alongside two hybrid securities Vodafone issued in September 2025 and are no longer treated as preferred-equivalent instruments.

For leverage calculations, Moody’s will continue to assign the hybrids 50% equity credit and 50% debt treatment. This reflects features including optional coupon deferral with mandatory settlement after five years, contractual maturities of at least 30 years and the absence of a coupon step-up before the tenth year.

The stable Vodafone rating outlook reflects expectations that the telecom company’s operating performance will continue improving after fiscal 2026. Moody’s expects adjusted debt-to-EBITDA to decline gradually through fiscal 2028.

Moody’s also expects Vodafone’s adjusted retained cash flow-to-net debt ratio to remain strong enough for its current rating, despite some anticipated weakening following the cash-funded buyout of VodafoneThree.