Moody's rates Qwest notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to Qwest Communications International Inc.'s proposed $500 million offering of senior unsecured notes due 2018. The agency also said it affirmed its corporate family rating at Ba2, probability of default at Ba2 and its speculative grade liquidity rating at SGL-1.

The outlook is stable.

The notes will be guaranteed on a senior unsecured basis by subsidiaries, Qwest Services Corp. and Qwest Capital Funding, Inc. The proceeds will be used for general corporate purposes, including repayment of debt.

The rating continues to be supported by the company's still sizable subscriber base, predictable cash generating capabilities of its local telephone operating subsidiary, moderate overall leverage and expectations for additional debt reduction, Moody's said.

Although Qwest faces challenges, including growing competition in its local markets, accelerating access-line losses and a lingering tough macroeconomic environment, the company continues to effectively manage costs, the agency said.

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