S&P assigns AT&T preferred shares BB+

S&P said it assigned its BB+ issue-level rating to AT&T Inc.'s proposed $1.75 billion of perpetual series C preferred shares. The company will use the proceeds for general corporate purposes, which S&P’s expects will include share repurchases. S&P classifies the instrument as having intermediate equity credit, 50% equity, based on the proposed terms and rates it two notches below the BBB long-term issuer credit rating on the company to reflect its subordination and payment flexibility due to the optional deferability of the interest payments.

The intermediate equity assessment for the series C preferred stock reflects the instrument's permanence, subordination and the payment flexibility of its interest payments. The instrument is perpetual with no maturity date but is callable five years after issuance. The dividend payments are deferrable and there is no limit on how long the dividends can be deferred. Also, the instrument is subordinated to all of AT&T's senior debt obligations.

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