TEXT-S&P assigns 'BB' rating to CenturyLink notes

Mon Oct 1, 2012 2:33pm EDT

Oct 1 - Standard & Poor's Ratings Services said today that it assigned its
'BB' issue-level rating and '4' recovery rating to Monroe, La.-based incumbent
telephone company CenturyLink Inc.'s proposed senior notes due 2023 and
2043 (undetermined amount). The '4' recovery rating indicates expectations for
average (30%-50%) recovery in the event of payment default. 

The company intends to use the net proceeds to redeem $550 million aggregate 
amount of Qwest Communications International Inc.'s (QCII) senior notes due 
2015 and repurchase all $800 million of its senior notes due 2018. As a result 
of this transaction, there will be no more remaining debt at QCII.  

The 'BB' corporate credit rating on CenturyLink is unchanged and the outlook 
remain stable as the transaction is unlikely to have an impact on the 
company's credit measures, including leverage, which was about 3.3x on a pro 
forma basis as of June 30, 2012. 

The ratings on CenturyLink reflect a business risk profile assessment of 
"fair" and a financial risk assessment of "significant." Key business risk 
factors include our expectation that revenues will continue to decline because 
of competition in its core consumer wireline phone business from cable 
telephony and wireless substitution, which contributed to access-line losses 
of about 6.1% during the second quarter of 2012, year over year, pro forma for 
the Qwest acquisition although access-line trends have shown steady 
improvement since the acquisition closed. We also consider the company's 
financial policy aggressive, with a substantial shareholder dividend payout, 
which limits debt reduction. Debt to EBITDA was about 3.3x as of June 30, 
2012, pro forma for acquisitions and including our adjustments for operating 
leases and postretirement liabilities. We expect leverage to remain in the 
low- to mid-3x area over the next few years.

Tempering factors in the business risk assessment include good scale and a 
favorable market position as the third-largest ILEC in the U.S.; solid 
operating margins and free operating cash flow generation; and modest growth 
in high-speed data services, which helps mitigate revenue declines from 
access-line losses. (For the complete corporate credit rating rationale, see 
the full analysis on CenturyLink, published April 27, 2012, on RatingsDirect.)

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RATINGS LIST

CenturyLink Inc.
 Corporate Credit Rating               BB/Stable/--

New Ratings

CenturyLink Inc.
 Proposed sr nts due 2023 and 2043     BB
   Recovery Rating                     4


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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