S&P rates Qwest notes BBB-

Standard & Poor's said it assigned its BBB- issue-level rating and 1 recovery rating to Qwest Corp.'s $950 million of senior notes due 2021. The 1 recovery rating indicates S&P's expectation for very high recovery in the event of payment default, the agency said.

Qwest is a subsidiary of CenturyLink Inc. The long-term corporate credit rating on CenturyLink is unchanged at BB and the outlook remains stable, S&P said.

The agency said that the rating reflects significant competition in the company's core consumer wireline phone business from cable telephony and wireless substitution; S&P's expectation for continued revenue declines because of ongoing access-line losses, which were about 7.4% annually during the second quarter of 2011, pro forma for the Qwest acquisition; integration risk related to the Qwest and Savvis acquisitions; and an aggressive shareholder-oriented financial policy with a substantial dividend payout, which limits debt reduction.

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