Fitch rates Sprint notes BB

Fitch Ratings said it assigned a BB/RR2 rating to Sprint Corp.'s proposed $1 billion junior guaranteed notes offering and maintained the rating watch positive on Sprint and Sprint Communications Inc.'s B+ long-term issuer default ratings and outstanding debt including debt issued at Sprint Capital Corp.

The notes are being issued under an indenture, dated Sept. 11, 2013, with covenants that are similar to the other Sprint senior notes. The notes will be guaranteed on a senior unsecured basis by Sprint Communications, Inc. Sprint intends to use the proceeds to refinance debt. The notes have a special mandatory redemption upon the consummation of the T-Mobile US, Inc. transaction.

Fitch said it believes the potential merger between Sprint Corp. and T-Mobile, if completed, will substantially strengthen the credit support for existing Sprint bondholders with the transaction as proposed, and can likely lead to a three-notch upgrade of the IDRs and depending on the debt issuance, up to three-notches on the outstanding debt of Sprint and its subsidiaries.

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