Southwestern Bell Corp’s agreement to invest $1,600m in a joint venture with Cox Enterprises Inc has caused a divergence of view between the two major credit rating agencies: Standard & Poor’s Corp said it affirmed the single-A senior unsecured debt and A1 commercial paper ratings of Southwestern Bell Capital Corp, the San Antonio, Texas company’s non-telephone financing vehicle, saying that maintenance of Southwestern Bell’s rating will be dependent upon the financing of its 40% interest in the partnership, but its debt leverage in the low-to mid 40% range is not expected to be significantly impacted. However Moody’s Investors Service Inc said it may downgrade its A2 rating on the medium-term notes of Southwestern Bell Capital Corp, and the Prime-1 rating assigned to the company’s ability to repay its short-term debt obligations. It will consider Southwestern Bell’s intention to grow its developing interest in the broadband industry, the conditions and terms of governance of the joint venture and the impact that the firm’s other unregulated investments have on credit quality, it said.
