US West Inc, Englewood, Colorado has had a very qualified opinion from Standard & Poor’s Corp, which affirmed its preliminary A-plus senior debt rating on the company, and the A-plus senior unsecured rating on its US West Capital Funding Inc and US West Financial Services Inc units. But the agency lowered US West Capital Funding Inc’s commercial paper rating to A-1′ from A-1′-plus and says that the ratings outlook on the $3,400m or so rated debt outstanding is negative. The double-A-minus senior unsecured debt rating and A-1-plus commercial paper rating of US West’s principle subsidiary, US West Communications Inc, which were not under review, are not affected by the latest action. The ratings were placed under review US West’s announcement of its planned $1,200m acquisition of two cable television operators serving the Atlanta area, and the actions reflect management’s increased tolerance for financial risk and the weaker interest cover that will result from the 60% debt financing of the acquisitions, plus the substantial capital spending required to upgrade the systems into full service networks. Standard & Poor’s also had in mind the company’s likely participation in the Federal Communications Commission’s upcoming Personal Communications Services spectrum auctions. It says the negative outlook reflects the company’s limited capacity to take on additional debt beyond that needed for the acquisitions, but the ratings agency added that it does not expect the joint bidding in the auctions for mobile licences to stress the company’s credit capacity.
