Fitch gives Verizon notes A-

Fitch Ratings said it assigned an A- rating to Verizon Communications Inc.'s offering of €1.4 billion of 1.625% senior unsecured notes due 2024 and €1 billion of 2.625% senior unsecured notes due 2031.

The company plans to use the proceeds for general corporate purposes, which may include the acquisition of spectrum licenses, and if market and other conditions permit, the repayment of debt.

Verizon’s issuer default rating is A- with a stable outlook.

Fitch said the February 2014 acquisition of the remaining Verizon Wireless stake has pressured Verizon’s recent credit metrics, pushing pro forma leverage at closing to about 2.6 times. Actual gross leverage at Sept. 30 was 2.5 times, with total debt at $109.2 billion. The agency expects Verizon to materially reduce debt over the next few years.

This, combined with EBITDA growth, is expected to reduce leverage to around 2 times by the end of 2016, a level more appropriate for an A- rating.

The precise timing of the reduction in leverage is subject to some uncertainty, given the potential for spending in upcoming auctions for wireless spectrum, a portion of which Fitch expects to be initially debt-funded.

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