S&P lowers Lumen

S&P said it lowered its rating on Lumen Technologies Inc. and removed the CreditWatch where it was placed with negative implications on Nov. 2. The agency also downgraded the issue-level ratings on the affected issues to CC , except for the rating on Lumen's 5 1/8 % senior unsecured notes due 2026, which it lowered to C from CCC-. The outlook is now negative.

Concurrently, the agency placed the B issue-level rating on Qwest Corp.'s senior unsecured debt and the B- issue-level rating on Qwest Capital Funding Inc.'s senior unsecured debt on CreditWatch with negative implications.

Lumen announced it entered into an amended transaction support agreement with a group of creditors holding about $12.5 billion of its outstanding debt, enabling it to extend its maturities and providing it with a runway to execute its operating strategy. “We therefore believe that the company is very likely to launch the proposed exchange sometime over the next month,” S&P said in a statement.

“The agreement will encompass exchanging a portion of the outstanding senior secured and unsecured debt at Lumen and wholly owned subsidiary Level 3 Financing Inc. for new debt with a senior ranking, higher coupons, fees and tighter covenants.

“In addition, the company will pay down a portion of this debt at par from the issuance of $1.325 billion of new secured debt at Level 3 and around $1.5 billion of net proceeds from the sale of its Europe, Middle East and Africa (EMEA) operations. Even though this debt is being exchanged at par, we do not view the terms as sufficient to offset the extension of maturities to 2029 and 2030,” the agency said.

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