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Moody's downgrades Sprint Nextel
Moody's Investors Service said it downgraded Sprint Nextel Corp.'s corporate family and probability-of-default ratings to Ba2 from Ba1 and lowered senior unsecured bonds issued by the company and Sprint Capital Corp. to Ba3 (LGD5, 74%) from Ba2 (LGD5, 78%).
The agency also affirmed Sprint Nextel's speculative-grade liquidity rating at SGL-1, its senior unsecured bank credit facility at Baa2 (LGD2, 12%) and Nextel Communications, Inc.'s senior unsecured bonds at Ba2 (LGD3, 39%).
The agency said the downgrade reflects the company's continuing challenges in stabilizing its post-paid wireless operations, despite recognized improvements in customer service, amid intense competition and slowing industry growth.
The company's strong liquidity profile and ability to continue generating robust free cash flow have supported the ratings over the last year, Moody's added.
The continued negative outlook reflects Moody's concerns about Sprint Nextel's ability to stabilize its operating performance and earnings in the face of a maturing market and fierce competition, especially from AT&T and Verizon.
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