S&P cuts Level 3 Communications to SD

Standard & Poor's said it lowered its corporate credit rating on Level 3 Communications Inc. to SD (selective default) from CC.

In addition, the agency said it lowered the ratings on the company's 6% convertible subordinated notes due 2010 and 2.875% convertible senior notes due 2010 to D from C.

At the same time, the agency said it removed these ratings from Creditwatch, where they were placed with negative implications on Nov. 18, following Level 3s announcement of tender offers for three convertible debt issues due in 2009 and 2010.

The C issue rating on the company's 6% convertible subordinated notes due 2009 remains on Creditwatch with negative implications until the below-par tender offer for this issue, which was extended until Dec. 30, is completed, S&P said.

Following the completion of this offer, the agency said it will lower the issue rating on these notes to D.

"These rating actions follow the completion of below-par debt tender offers for two of the three issues," said S&P credit analyst Susan Madison, "and Standard & Poor's viewed these offers as distressed and, as such, tantamount to default."

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