Nynex Corp has taken a hit from Moody’s Investors Service Inc, which downgraded its debentures and medium-term notes to A3 from A2, and its short-term rating for commercial paper to Prime-2 from Prime-1. Nynex Capital Funding Co’s and Nynex Credit Co’s medium-term notes were cut to A3 from A2. About $2,500m of debt is affected. The action was based on the rating agency’s expectation that Nynex will continue to expand diversified activities, which have a higher risk profile, and that these investments will be funded with a significant debt component. It put Nynex ratings under review in October after the New York and New England phone company said it would invest up to $1,200m in Viacom Inc. The investment in Viacom enlarges a portfolio of diversified activities that represent both significant financial commitment and substantial business risk, and Moody’s is uncertain how much operational and financial control Nynex will have over Viacom, and doesn’t like the fact that it is in a bidding war for Paramount Communications Inc.
