Moody's: Verizon notes Baa1

Moody's Investors Service said it assigned Baa1 ratings to Verizon Communications, Inc.'s proposed senior notes offerings. The outlook is stable.

The note proceeds, borrowings under the company's credit agreement, other debt and available cash will be used to finance the acquisition of Vodafone's 45% interest in Cellco Partnership (d/b/a Verizon Wireless).

"This transaction will cause leverage to spike and remain elevated for an extended timeframe as higher interest expense and increased dividend payments offset the significant distributions that Verizon will retain as a result of acquiring 100% ownership of Verizon Wireless, reducing the amount of cash available for debt reduction," Dennis Saputo, Moody's senior vice president, said in an agency news release.

"In addition, our expectation for significantly higher cash tax payments beginning in 2014 will limit Verizon's ability to reduce the incremental $67 billion of debt associated with the transaction."

The agency said Verizon's Baa1 rating reflects its significant scale of operations, the diversity of its revenue mix and a strong market position across all business segments, particularly wireless.

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