CenturyLink Inc. (CTL:US), the phone company that lost its investment-grade rating from Standard & Poor’s last year, postponed a benchmark debt offering intended to help redeem bonds issued by its Qwest Communications International Inc. unit.
The company, which acquired Qwest for $23.8 billion in 2011, planned to issue 10-year bonds that may have yielded about 337 basis points more than similar-maturity Treasuries and 30- year securities at a relative yield of 450 basis points, according to a person familiar with the transaction. The sale was postponed because of market conditions, said the person, who asked not to be identified, citing a lack of authorization to speak publicly.
Proceeds were to be used for a redemption of Qwest’s $550 million of 8 percent, October 2015 debt at 104 percent and a tender offer for $800 million of 7.125 percent, April 2018 bonds, the Monroe, Louisiana-based company said today in a filing. The offering, which was to include an add-on to the company’s 7.65 percent notes due in March 2042, was to be of benchmark size, typically at least $500 million, the person said.
The 2015 bonds traded on Sept. 4 at 104.7 cents on the dollar, more than the price at which CenturyLink is calling them, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The new bonds were to be rated Baa3, the lowest level of investment grade, by Moody’s Investors Service, the ratings company said in a statement today. Standard & Poor’s said in a separate statement that it assigned a grade two levels lower at BB. JPMorgan Chase & Co. and Royal Bank of Canada were managing the offering.
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