S&P assigns Level 3 notes BB

S&P said it assigned its BB issue-level rating and 4 recovery rating to Level 3 Financing Inc.’s proposed $1 billion of senior unsecured notes due 2028. Level 3 is a wholly owned subsidiary of CenturyLink Inc. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery in the event of a payment default. Similar to the other unsecured debt at Level 3, the notes will have a downstream guarantee from Level 3 Parent LLC and an upstream guarantee from its primary operating subsidiary Level 3 Communications LLC.

“We expect the company to use the net proceeds from these notes, along with cash on hand, to repay its $840 million 5 3/8% senior notes due 2022 and $160 million 5 5/8% senior notes due 2023.

The transaction does not affect CenturyLink’s credit metrics, S&P’s BB issuer credit rating and stable outlook on the company remain unchanged, the agency said.

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