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Fitch upgrades Qwest
Fitch has upgraded and removed from Rating Watch positive Qwest Communications International Inc.'s issuer default rating to B+ from B. Other upgraded ratings include Qwest Communications International's senior unsecured debt to BB from B+ and senior unsecured debt to B+ from B-; Qwest Capital Funding's senior unsecured debt to B+ from B-; Qwest Services Corp.'s senior secured revolver to BB+ from BB and subordinate notes to BB from B+; Qwest Communications Corp.'s senior unsecured debt to B+ from B- and Qwest Corp.'s senior unsecured debt to BB+ from BB and term loan to BB+ from BB.
Fitch revised the outlook to positive from stable.
Fitch initially placed all of the ratings assigned to Qwest and its subsidiaries on Rating Watch positive following Qwest's announcement that its subsidiary Qwest Services Corp. launched a $3 billion cash tender offer and consent solicitation for its 13 ½% senior subordinated secured notes due 2010, 14% senior subordinated secured notes due 2014 and 13% senior subordinated secured notes due 2007.
Fitch's upgrade of Qwest is concurrent with the closing of the early participation stage of the tender. Fitch believes that the tender, funded in part with approximately $2 billion of cash from Qwest's balance sheet and from the proceeds generated by Qwest's issuance of $1.1 billion of 3½% convertible senior notes due 2025, will generate net interest savings of approximately $250 million and will simplify the company's capital structure.
The positive outlook reflects Fitch's expectation for further stabilization of the company's revenue base as well as increased strengthening of its in-region long distance business and DSL products.
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