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Vote of confidence on Qwest
Standard & Poor's raises debt ratings, cites strong liquidity
By David Milstead
Rocky Mountain News
Friday, June 16, 2006

Ratings agency Standard & Poor's upgraded its rating of Qwest debt, another milestone in the company's efforts to repair its balance sheet.  S&P raised its short-term rating on Qwest to B-1 from B-2.  The long-term rating is BB-, with a positive outlook.

The B-1 rating is just two steps away from an investment-grade rating, prized by companies as a seal of approval for their creditworthiness.  The BB- is three steps below investment grade.

Ratings below investment grade are commonly called junk, which is where Qwest's bonds have been rated since the collapse of the telecom industry that started in 2000.

In a statement, Standard & Poor's credit analyst Catherine Cosentin said the upgrade "is supported by expectations of continued strong liquidity and reduced event risk."  The proposed shareholder settlement, in which Qwest plans to pay $400 to end a class-action lawsuit, "will largely address many remaining overhang concerns," she said.

In a statement, Qwest spokesman Bob Toevs said, "We are very pleased with the upgrade from S&P and the recognition of the progress we've made in improving liquidity, generating strong free cash flow and turning profitable, as well as our substantial deleveraging efforts."

Toevs said Qwest's short-term rating with Moody's, an S&P rival, is SGL-1, Moody's highest junk- bond rating.  It was upgraded from SGL-2 in November 2004.

David Milstead is finance editor of the Rocky Mountain News. He can be reached at 303-892-2648 or milstead@RockyMountainNews.com.

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_4778038,00.html