S&P lifts Lumen

S&P said it raised its ratings for Lumen Technologies Inc. to CCC+ from SD, Selective Default, and assigned B issue-level and 1 recovery ratings to its $1.325 billion of new senior secured debt issued at wholly owned subsidiary Level 3 Financing Inc. The 1 recovery rating indicates very high (95%) recovery if Lumen defaults.

The agency said it also lowered the rating on the senior unsecured debt at wholly owned subsidiary Qwest Corp. to B- from B and the rating on the debt at Qwest Capital Funding Inc. to CCC- from B-. Concurrently, it removed all the Qwest issue-level ratings from CreditWatch, where the agency placed them with negative implications on Jan. 30.

“The completed restructuring alleviates liquidity and refinancing pressures through 2027. Prior to the transaction, the company had about $2.1 billion due in 2025 and 2026 and $9.5 billion of debt maturing in 2027. Additionally, its $2.2 billion revolving credit facility was set to expire in January 2025. The restructuring enabled it to reduce its debt maturities through 2027 to about $1.4 billion, which can be addressed with cash and availability under its new $1 billion revolving credit facility due in 2028, as well as modest FOCF (including the tax benefit) in 2024,” S&P said in a statement.

Though the agency said it forecasts negative free operating cash flow keeping leverage high, Lumen should have enough liquidity from cash and revolver availability over the next 12 months.

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