S&P cuts CenturyLink, ups Qwest debt

Standard & Poor's said that it lowered the corporate credit rating on CenturyLink Inc. to BB from BBB- and its short-term rating to B from A-3.

S&P removed all the ratings from CreditWatch, where they were placed on April 22, 2010 following the announcement that CenturyLink agreed to acquire Qwest in a stock-for-stock transaction.

S&P lowered the senior debt ratings at CenturyLink and its subsidiary Embarq Corp. to BB from BBB- and assigned a 3 recovery rating to this debt, which indicates expectations for meaningful (50% to 70%) recovery.

S&P affirmed the BBB- issue-level ratings at Qwest Corp. and the 1 recovery rating on the debt is unchanged. The 1 recovery rating indicates expectations for very high (90% to 100%) recovery.

S&P raised the senior debt ratings at Qwest Communications International Inc. and Qwest Capital Funding to BB- from B+ and revised the recovery ratings to 5 from 6, indicating expectations for modest (10% to 30%) recovery.

The ratings on CenturyLink reflect significant competition in its core consumer wireline phone business from cable telephony and wireless substitution as well as the expectation for continued revenue declines because of ongoing access-line losses, integration risk and an aggressive shareholder-oriented financial policy with a substantial dividend payout, the agency said.

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