S&P lowers Lumen

S&P said it lowered its ratings on Lumen Technologies Inc.'s senior unsecured debt and raised its ratings on Qwest Capital Funding’s senior unsecured debt.

The agency trimmed Lumen’s senior unsecured debt to CCC+ from B- and revised the recovery rating to 6 from 5. The agency also removed the rating from CreditWatch, where it was placed with negative implications on March 22. The 6 recovery rating indicates negligible (0%-10%; rounded estimate: 0%) recovery in default.

Concurrently, S&P raised the issue-level rating on Qwest Capital senior unsecured debt to B+, one notch above the issuer-credit rating, from B and revised the recovery rating to 2 from 3. The 2 recovery rating indicates substantial (70%-90%; rounded estimate: 85%) in default.

“The rating action follows the completion of the company's debt exchange where wholly owned subsidiary Level 3 Financing Inc. issued $924.5 million of 10½% senior secured notes due 2030 in exchange for $1.554 billion of Lumen's unsecured debt,” the agency said in a press release.

Though Lumen’s unsecured debt has been reduced, the lower ratings reflect a reduction in value available to its senior unsecured creditors and a shift to Level 3; the higher Qwest Capital rating mirrors the view that the residual value at the Qwest entity is enough to cover the $192 million in notes outstanding at Qwest, S&P explained.

The outlook is negative.

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