MCI note coupons set to step up

New York, Dec. 8 - MCI Inc. said the coupons on its $5.7 billion of outstanding notes may be reset after Moody's Investors Service assigns a rating - and under the terms of the notes, if there is any change, the direction will be upwards.

Standard & Poor's gave the notes a B+ rating on Wednesday.

Any reset will be effective the day after Moody's announces its rating, the Ashburn, Va., telecommunications company said.

MCI has outstanding $1.98 billion of 5.908% senior notes due 2007, $1.98 billion of 6.688% senior notes due 2009, and $1.70 billion of 7.735% senior notes due 2014, all of them issued on its emergence from bankruptcy.

Under the terms of the notes, the interest rate can be reset up to 200 basis points higher or 400 basis points lower depending on the ratings assigned.

Given the S&P assignment, if Moody's rates the notes at B1, B2 or B3, the interest rate will increase by 100 basis points, if Moody's rates them below B3 the rate will increase by 200 basis points, if Moody's rates them Ba3 or higher then the rate will be unchanged.

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