S&P Cuts AT&T Credit Rating to BBB
NEW YORK (AP) _ Despite efforts to reduce debt and build up cash balances, AT&T Corp. had its corporate credit rating cut one notch by Standard & Poor’s to triple-B, two rungs above speculative grade.
S&P said the Wednesday downgrade reflects the risk the Bedminster, N.J.-based long-distance carrier faces from encroaching technologies, competitive pricing pressures and the slow economic recovery.
The ratings agency said the AT&T’s rating outlook is stable, and its short-term and commercial paper ratings were affirmed at A-62.
S&P said that as of March 31, 2003, total debt outstanding at AT&T was about $18.1 billion, unadjusted for operating leases and other post-retirement employee benefits. Net debt was about $12 billion.
The company’s debt load has been slashed from $56.2 billion due to the spin-off of AT&T Wireless, the merger of AT&T Broadband with broadband cable-network company Comcast Corp. and a growth in free cash flow, according to S&P.
Meanwhile, AT&T has ``a very good liquidity position to meet upcoming debt maturities,″ S&P analyst Rosemarie Kalinowski said in a written report.
AT&T spokesman Paul Kranhold said that ``Though we understand S&P’s concerns about the state of the overall industry, we think we are one of the strongest players with one of the strongest balance sheets.″
AT&T 7.80 percent notes maturing Nov. 15, 2011 were quoted late Thursday morning at a spread over Treasurys of 0.206 percent, according to MarketAxess, an online corporate bond trading consortium and data provider based in New York. Late Wednesday, the spread was about 0.213 basis points.
Shares of the company closed at $19.42 Thursday, down 46 cents, or 2.3 percent, on the New York Stock Exchange.