S&P rates Alcatel-Lucent convertibles B-

Standard & Poor's said it assigned its B- issue rating to the proposed €1 billion convertible bonds to be issued by Alcatel-Lucent.

The recovery rating on the proposed bonds is 4, indicating the view of average (30%-50%) recovery prospects in the event of a payment default.

At the same time, the agency placed its CCC+ issue rating on the existing senior unsecured notes issued by Alcatel-Lucent and Alcatel Lucent USA on CreditWatch with positive implications. The recovery rating on the existing notes is unchanged at 5, indicating an expectation of modest (10%-30%) recovery prospects in the event of a payment default.

S&P said the CreditWatch positive placement reflects its understanding that Alcatel-Lucent will use the entire proceeds from the proposed €1 billion convertible bonds to repay first-lien debt, which, in the agency's opinion, will improve the recovery prospects for all the unsecured notes issued by Alcatel-Lucent and Alcatel Lucent USA.

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