Moody's affirms AT&T

Moody's Investors Service said it affirmed AT&T Inc.'s A2 senior unsecured and Prime 1 short-term ratings and the company's stable outlook, despite a $17 billion increase in adjusted debt from 2007 through 2008.

This is based on Moody's expectation that the company will continue with its debt reduction strategy, leading to a stated debt/EBITDA leverage target of between 1.3x-1.5x.

According to the agency, AT&T's ratings derive additional support from the company's position as the largest telecommunications company in the United States and its strong and well-diversified cash flow.

At the same time, Moody's noted the potential for negative forces to pressure AT&T's fundamental operating profile, largely stemming from secular declines of the company's core wireline operations and the maturation of the wireless business in the United States.

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