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S&P rates Level 3 notes BB-, cuts Lumen
S&P said it assigned Level 3 Financing Inc.’s new $1.1 billion of 10½% senior secured notes due 2030 BB- issue and 1 recovery ratings. The 1 recovery rating indicates very high (90%-100%; rounded estimate: 95%) recovery in default. The notes will be offered in exchange for a series of Lumen Technologies Inc.’s senior unsecured notes at a discount to par.
Concurrently, S&P downgraded Lumen’s issue rating to B from B+, the senior secured debt of Lumen and Qwest Corp. to BB- from BB, the rating on the unsecured debt at Qwest Capital Funding Inc. and Level 3 to B from B+ and Lumen’s unsecured debt to B- from B.
The agency said it also placed Lumen’s unsecured rating on CreditWatch with negative implications because of the potential for a lower recovery rating. Any downgrade would probably be limited to one notch.
“The downgrade reflects uncertainty regarding management's strategy to improve operating and financial performance. Lumen's new management team plans to invest $435 million-$600 million in 2023 to reposition the business for growth with greater focus on customer experience, simplification, and innovation. However, we believe it may take longer than expected to execute on its strategy and convert investments into improving top-line trends,” S&P said in a press release.
The outlook is negative.
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