TEXT-S&P rates Level 3 Communications term loan 'B+'
Sept 26 - Standard & Poor's Ratings Services said today that it assigned its 'B+' issue-level rating and '1' recovery rating to Level 3 Financing Inc.'s $1.2 billion term loan (tranche B-II 2019) due 2019. Level 3 Financing Inc. is a wholly owned subsidiary of Broomfield, Colo.-based Level 3 Communications Inc. (Level 3). The '1' recovery rating on this senior secured loan reflects our expectation of very high (90% to 100%) recovery of principal in the event of a default. The new facility will repay an aggregate of $1.2 billion of two term loans (tranches B-II and B-III) due 2018. Other ratings on Level 3 and subsidiaries, including the 'B-' corporate credit rating and the positive outlook, are not affected by the new notes. Approximately $8.4 billion of debt was reported at June 30, 2012 (excluding third-quarter financing transactions). Level 3 is a facilities-based, global integrated provider of a range of communications services including voice, data, and broadband on its extensive long-haul and metropolitan fiber networks. The company's October 2011 $3 billion acquisition of Global Crossing Ltd. expanded its footprint, especially in Latin America. Level 3 noted that as of the second quarter of this year, it had realized about 40% of what it ultimately projects to be $300 million of operating synergies from the Global Crossing acquisition. The positive outlook cites the potential for a one-notch upgrade if Level 3 demonstrates that it is successfully integrating Global Crossing and, further, is on track to realize at least the bulk of projected operating synergies. (For the complete corporate credit rating rationale, see the summary analysis on Level 3, to be published on RatingsDirect immediately following the release of this article.) RELATED CRITERIA AND RESEARCH -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- U.S. Telecom And Cable Companies' Maturities Are Manageable, But Lower-Rated Issuers Face Some Liquidity Challenges, July 23, 2012 -- U.S. Telecom And Cable Companies, Strongest To Weakest, July 13, 2012 -- U.S. Telecom And Cable Ratings Should Be Stable Overall During Weak Economic Recovery, July 13, 2012 -- A Matter of Policy: U.S. Telecom Companies Maintain High Dividend Payouts, But For How Long?, May 30, 2012 -- A Matter of Policy: U.S. Cable And Satellite-TV Companies Ratchet Up Shareholder Payouts, May 16, 2012 -- Top 10 Investor Questions: U.S. Telecom and Cable Industries, May 10, 2012 -- Assessing The Four-Notch Rating Gap Between The Two U.S. Direct-To-Home Satellite Video Operators, May 9, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 RATINGS LIST Level 3 Communications Inc. Corporate Credit Rating B-/Positive/-- New Ratings Level 3 Financing Inc. $1.2 bil. term loan due 2019 B+ Recovery Rating 1 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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