S&P drops Pakistan Mobile to CC

Standard & Poor's said it lowered the long-term corporate credit rating on Pakistan Mobile Communications Ltd. to CC from B- and on Mobilink's $250 million senior unsecured notes due 2013 to CC from B-.

The outlook is negative.

The actions follow the company's announcement of an offer to repurchase for cash up to $100 million of the principal amount of senior unsecured notes at a 23% to 30% discount to face value, according to the agency.

"If the proposed transaction is completed, we would view it as being tantamount to default for two key reasons," S&P analyst Yasmin Wirjawan noted in a statement. "First, the offer represents a material discount to the par amount (or face value) of the outstanding issue. Second, we believe Mobilink could face difficulty in servicing its debt obligations or remaining in compliance with its covenants over the next one to two years."

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