S&P rates Nextel Partners

Standard & Poor's said it assigned its B+ bank loan rating along with a recovery rating of 3 to the $800 million senior secured credit facility of Nextel Partners Operating Corp., a wholly owned subsidiary of Nextel Partners Inc.

In addition, a B- rating has been assigned to Nextel Partners' $25 million 8.125% senior notes due 2011.

S&P said the rating on Nextel Partners' senior unsecured debt was affirmed at B- and removed from CreditWatch, where it was placed with positive implications May 7. The B+ corporate credit rating also was affirmed (this rating was not previously on CreditWatch). The outlook remains stable.

Nextel Partners used the new credit facility, proceeds from the new notes, and about $60 million of cash to refinance its $475 million bank facility and about $350 million of 11% senior notes due 2010. As a result of the refinancing, the ratings on the $475 million bank facility and the 11% senior notes due 2010 have been withdrawn.

S&P said the rating on Nextel Partners is dominated by financial risks associated with the company's still aggressive leverage, which was about 5.5x debt to annualized EBITDA (about 5.8x after adjusting for operating leases) for the quarter that ended in March. The high leverage is mainly a legacy of the company's use of substantial debt to finance the building of a network and operating losses that typically occur in the early stages of a business.

Somewhat mitigating these risks is Nextel Partners' good competitive position, and solid EBITDA and free cash flow prospects.

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