CORRECTED - CORRECTED-Credit jitters hit telecom credit default swaps

(Corrects Alltel purchase price in third graph)

NEW YORK, Oct 3 (Reuters) - Debt protection costs on Alltel Corp jumped to their highest in four months, and AT&T Inc's (T.N) credit default swaps hit a record high as fears over the impact of credit logjams hit the telecom sector.

Alltel's swaps jumped on concerns that risk aversion in the credit markets will impede the ability of Verizon Wireless to get funding to acquire the company while AT&T's debt protection jumped on concerns over the companies' ability to roll over its commercial paper.

Verizon Wireless in June said it would buy Alltel for $28.1 billion, including debt, which would vault it to first place in the U.S. market ahead of AT&T Inc (T.N).

However, Verizon Wireless, which is 55 percent owned by Verizon Communications Inc (VZ.N) and 45 percent owned by Vodafone Group Plc (VOD.L), does not have a committed back-stop facility to fund the deal, analysts at Barclays Capital said in a report on Friday.

"Alltel CDS has widened significantly over concerns that Verizon Wireless may have trouble securing financing to complete the acquisition," they said.

The cost to insure Alltel's debt with credit default swaps jumped to 240 basis points on Friday, or $240,000 per year for five years to insure $10 million in debt, from 148 basis points on Wednesday and 118 basis points a week ago, according to Markit Intraday.

Swaps on Alltel's debt traded above 600 basis points before the Verizon deal was announced.

Despite the volatility, Barclays expects the deal will still go through.

"We view this as a core transaction for Verizon and do expect the deal to close, despite the current funding environment," they said. "At worst, we could envision a scenario in which closing is delayed somewhat."

AT&T SWAPS JUMP

AT&T Inc's swaps jumped to a record 139 basis points, from 117 basis points on Thursday and around 81 basis points a week ago, Markit data showed.

The telecom company's swaps have underperformed "owing to concerns regarding AT&T's ability to roll commercial paper," the Barclays analysts said.

However, "AT&T has reportedly been able to issue 30/60/90-day commercial paper, and while rates are undoubtedly high/uncomfortable, we do not view this as a liquidity issue," they said, adding that in a worst case scenario the company has a $10 billion back up revolving credit facility. (Reporting by Karen Brettell; Editing by Theodore d'Afflisio)