Fitch rates MCI notes B

Fitch Ratings said it assigned an initial rating of B to MCI Inc.'s $5.665 billion outstanding of senior unsecured notes. The senior unsecured notes were issued in conjunction with MCI's emergence from bankruptcy on April 20.

The outlook is negative.

Fitch's B rating and negative outlook incorporate the highly speculative nature of MCI's credit profile as evidenced by the continued declines in revenue and operating cash flow from its long distance business, the negative outlook for the intensely competitive long distance sector, the lack of diversification with respect to its revenue stream and the unknowns surrounding the claims filed by certain states regarding the predecessor company's (WorldCom Inc.) state income tax filings.

The foregoing negative issues are partly offset by current credit protection metrics that are strong for the current rating and the strong near-term liquidity provided by its $5.4 billion in cash at June 30, 2004. The B rating also incorporates the potential collateralization of senior secured facilities, as MCI has disclosed that it is seeking revolving credit facilities in the range of $750 million to $1 billion.

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