Fitch lowers Sprint Nextel

Fitch Ratings said it downgraded Sprint Nextel Corp.'s issuer default rating to B+ from BB- and senior notes to B+/RR4 from BB-, Sprint Capital Corp.'s issuer default rating to B+ from BB- and senior notes to B+/RR4 from BB-, and Nextel Communications Inc.'s issuer default rating to B+ from BB- and senior notes to B+/RR4 from BB-.

The senior unsecured credit facility was revised to BB/RR2 from BB-.

The outlook is negative.

The downgrade reflects the increased credit risk, financially and operationally in the short to medium term, resulting from materially greater cash requirements associated with the iPhone and accelerated network vision plans, according to the agency.

Leverage for Sprint is expected to peak at about 5 times in 2012 before an expected decline in the out years as the network modernization project progresses although certainty around timing and pace of any improvement is limited, the agency said.

Leverage was about 3.3x at the end of the second quarter.

Fitch said it also remains concerned with refinancing risk and views Sprint Nextel's liquidity position as constrained despite the current high levels of cash.

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