Moody's slashes Lumen, view to negative

Moody's Investors Service said it downgraded Lumen Technologies, Inc.'s senior secured rating to B3 from Ba3 and its senior unsecured rating to Caa1 from B2. The agency also downgraded Level 3 Financing, Inc.'s senior secured rating to Ba2 from Ba1 and its senior unsecured rating to B1 from Ba3 as well as Qwest Corp.'s senior unsecured rating to B1 from Ba2.

Concurrently, Moody’s cut the corporate family rating to B2 from Ba3 and its probability of default rating to B2-PD from Ba3-PD. The company's speculative grade liquidity rating was downgraded to SGL-3 from SGL-2, reflecting adequate liquidity and Moody’s revised the outlook to negative from stable.

“The downgrades and change in outlook to negative reflect, in part, Lumen's governance weaknesses. These include a departure from the company's prior financial strategy and risk management practices and an inconsistent track record. The inconsistent track record is evidenced by the company's prolonged difficulties meaningfully lowering revenue contraction rates across its business segments,” the agency said in a statement.

Moody’s noted that Lumen’s debt starts maturing in January 2025 and will balloon to more than $9 billion due in 2027.

However, the agency said Lumen can borrow at Level 3 and Qwest, delay less critical but still sizable elements of current capital investment plans, raise cash from the sale of other assets, including non-essential property, and cut costs through additional operating efficiencies.

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