S&P reviews T-Mobile, rates notes BB

S&P said it placed its BB corporate credit rating and senior unsecured debt rating on T-Mobile US Inc. on CreditWatch with positive implications.

The BBB- senior secured debt rating is not on CreditWatch because it is subject to a ratings cap.

At the same time, the agency assigned a BB issue-level rating and 3 recovery rating to the company's proposed $1.5 billion of senior unsecured notes, which will consist of five-, eight- and 10-year maturities. The 3 recovery rating indicates an expectation for meaningful (50%-70%; point estimate: 65%) recovery in the event of payment default.

S&P also assigned a BB issue-level rating and 3 recovery rating to the proposed $1 billion of senior notes due 2022, $1.25 billion of senior notes due 2025 and $1.25 billion of senior notes due 2027 that will be issued to parent company Deutsche Telekom AG. (DT). The notes are also on CreditWatch with positive implications and will be issued by wholly owned subsidiary T-Mobile USA Inc.

The agency said it believes the company will use net proceeds from the $5 billion of new notes ($1.5 billion of public notes and $3.5 billion of notes issued to DT) to refinance existing debt.

"The CreditWatch placement follows T-Mobile's strong operating and financial performance in 2016 and 2017 guidance that included healthy subscriber growth and improved FOCF generation," S&P credit analyst Allyn Arden said in a news release.

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