S&P rates Level 3 notes BB

S&P said it assigned its BB issue-level rating and 4 recovery rating to Level 3 Financing Inc.’s proposed $840 million of senior unsecured notes due 2029. The 4 recovery rating indicates S&P’s expectation of average (30%-50%; rounded estimate: 45%) recovery in the event of a default.

Similar to Level 3’s other unsecured debt, the notes will have a downstream guarantee from Level 3 Parent LLC and an upstream guarantee from its primary operating subsidiary Level 3 Communications LLC.

The company is expected to use the proceeds along with cash on hand to repay $140 million remaining of the 5 5/8% senior notes due 2023 and $700 million of the 5 1/8% senior notes due 2023.

“Because the transaction does not affect CenturyLink’s credit metrics, our issuer credit rating and outlook on the company remain BB and stable, respectively. Furthermore, we view transaction favorably in that it will push our Level 3’s 2023 maturities at attractive rates,” S&P said in a press release.

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