SAN ANTONIO, Texas-SBC Communications Inc. sold a $1 billion issue of 10-year senior unsecured notes Aug. 14 that the company will use primarily to repay outstanding commercial paper, which is debt that matures in less than one year.
Deutsche Bank Securities Inc., J.P. Morgan and Salomon Smith Barney were joint lead mangers for the offering, which pays investors 5.875 percent interest.
Standards & Poor’s Ratings Services, New York, assigned an AA- investment-grade rating to the issue, affirmed that rating on SBC’s long-term debt and accorded a stable outlook to the carrier’s debt ratings.
“Despite economic challenges, SBC is expected to maintain a financial profile supportive of the ratings. . The ratings on SBC reflect the healthy cash flows from its core telephone operating companies and the strength of its wireless segment,” said Catherine Cosentino, telecommunications analyst for S&P, in her August 14 report on the new debt deal.
Chicago-based Fitch Ratings also affirmed its investment-grade AA rating on SBC and assigned the same rating to the new note offering. However, Fitch also said August 14 it attached a negative outlook to SBC’s debt ratings to “reflect the unfavorable impact of the current weak demand for telecom services, continued competitive pressures and the impacts of a difficult regulatory environment on SBC’s core wireline business.”
A week earlier, Moody’s Investors Service Inc., New York, said it had placed its Aa3 investment-grade rating of SBC on review for possible downgrade because of concerns about wireless communications growth, cable television broadband competition and regulatory pricing policies affecting landline services. The ongoing Moody’s review also encompasses the debt of other regional Bell operating companies, including Atlanta-based BellSouth Corp. and Verizon Communications Inc., Bedminster, N.J.
