S&P cuts Verizon to BBB+

Standard & Poor's said it lowered its corporate credit rating and senior unsecured debt rating on Verizon Communications Inc. and its related entities, including Cellco Partnership, to BBB+ from A-.

The short-term rating on Verizon was affirmed at A-2. The outlook is stable.

S&P said the downgrade follows the company's announced agreement to acquire Vodafone's 45% stake in Cellco Partnership for $130 billion, which it is financing with about $67 billion in debt including preferred equity that it classifies as debt and a $5 billion note payable to Vodafone, common equity currently valued at about $60.2 billion and the rest in other consideration including the sale of Verizon's stake in Vodafone Italy.

Based on the increased debt and S&P's inclusion of the additional 45% of Cellco's EBITDA in our ratio calculations, the agency said it expects the transaction to result in pro forma leverage including adjustments rising to the 3.4x from 3x currently, and funds from operations to debt declining to the low-20% area.

"We expect the company to reduce leverage over the next few years but our base-case scenario assumes that debt to EBITDA remains at 3x or higher through 2014 and FFO to debt remains in the mid-20% area; we have therefore revised our financial risk profile assessment to 'significant' from 'intermediate,'" S&P credit analyst Catherine Cosentino said in a news release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.