Fitch rates Sprint notes BB, B+

Fitch Ratings said it assigned a BB/RR2 rating to Sprint Nextel Corp.'s proposed junior guaranteed notes due 2020 and a B+/RR4 rating to its proposed senior notes due 2017.

Fitch has a B+ issuer default rating for Sprint Nextel and rates its senior credit facility at BB/RR2, its junior guaranteed notes at BB/RR2 and its senior notes at B+/RR4. The outlook is negative.

The company plans to sell $2 billion of the notes in all and use the proceeds for general corporate purposes, which may include redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire Corp.

The agency said the debt issuance takes another step toward reducing medium-term refinancing risk and fortifying Sprint Nextel's liquidity position due to material cash requirements related to the network modernization project and iPhone rollout.

The ratings have limited flexibility for execution missteps, weakened core operational results, significantly higher cash requirements or lack of expected benefits from the network modernization project, Fitch said.

Leverage was about 4 times at the end of the fourth quarter, and Fitch expects it to peak in the 5 times range during 2012. The agency said that as a result, it will not revise the negative outlook during 2012.

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