Fitch Ratings has downgraded Stamford’s Frontier Communications following its announced $2 billion purchase of AT&T’s Connecticut wireline operations.
Fitch downgraded Frontier’s ratings outlook from stable to negative on Wednesday, the day after the deal was announced. It also lowered the company’s issuer default rating and debt ratings for senior unsecured notes from ‘BB+’ to ‘BB.’
The rating agency said increased debt incurred in the transaction led to its downgrade decision.
Fitch also noted positives for Frontier. The deal will bring increased scale and improved free cash flow. And Frontier’s existing debt doesn’t mature until at least 2016, which means it won’t need to access capital markets — where it will may pay higher interest rates with a poorer rating — until then.
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