OREANDA-NEWS. S&P Global Ratings today assigned its 'BBB-' issue level and '1' recovery rating to Qwest Corp.'s proposed senior notes (amount to be determined) due 2056. The '1' recovery rating indicates our expectation for very high (90%-100%) recovery in the event of a payment default.

We expect the company will use net proceeds to redeem all or a portion of its $661 million outstanding of senior notes due 2051. We assume that the company will use any incremental proceeds from the debt issuance to refinance existing debt at Qwest Corp. Since the transaction does not affect the financial metrics of Qwest Corp.'s parent CenturyLink Inc., the 'BB' corporate credit rating and stable outlook on CenturyLink remain unchanged. Our base-case forecast includes the assumption that adjusted debt to EBITDA will be in the high-3x area over the next few years.

Moreover, the issue-level and recovery ratings on existing debt at CenturyLink and its related subsidiaries, including Qwest Corp., likewise remain unchanged, since this transaction does not alter our assumptions for the amount of debt at Qwest Corp. or any other entity within the CenturyLink capital structure, at the time of our simulated default.