S&P gives Level 3 loan B+

Standard & Poor's said it is assigning its B+ issue-level rating and 1 recovery rating to Level 3 Communications Inc. subsidiary Level 3 Financing Inc.'s proposed $550 million senior secured tranche B-3 term loan due 2018. The 1 recovery reflects an expectation of very high recovery of principal in the event of a default, the agency said.

At the same time, S&P said it affirmed the CCC issue-level rating on unsecured debt at Level 3 Financing and removed that rating from CreditWatch positive. That CreditWatch had indicated the potential for improved recovery expectations for the unsecured debt as a result of the $3 billion acquisition of Global Crossing Ltd., the agency said. However, S&P said the 6 recovery rating on the unsecured debt does not currently have the potential to improve.

Other ratings on Level 3 Communications, including the B- corporate credit rating and the positive outlook, are not affected by the new $550 million term loan.

S&P said the ratings on Level 3 incorporate its view of the company's business risk profile as weak. Ratings also reflect the agency's opinion that, while leverage does improve as a result of the Global Crossing transaction, Level 3's financial risk profile remains highly leveraged.

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