S&P rates Qwest notes BBB-

Standard & Poor's said that it assigned a BBB- issue-level rating and 1 recovery rating to Qwest Corp.'s proposed senior notes due 2051. The 1 recovery rating indicates expectations for very high (90% to 100%) recovery in the event of payment default.

The company intends to use net proceeds from the notes, coupled with cash on hand and revolver borrowings from parent company CenturyLink Inc., to redeem the $825 million of Qwest notes due 2011.

The long-term corporate credit rating on CenturyLink is BB and the rating outlook is stable.

The ratings continue to reflect significant competition in its core consumer wireline phone business from cable telephony and wireless substitution, the expectation for continued revenue declines because of ongoing access-line losses and an aggressive shareholder-oriented financial policy with a substantial dividend payout, the agency said.

Tempering factors include a favorable market position, solid operating margins and free cash flow generation, modest growth in high-speed data services and geographic diversity, the agency added.

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