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Moody's Investors Service (Moody's) has affirmed the Ba3 corporate family rating (CFR) for CenturyLink, Inc. (CenturyLink). Moody's has also affirmed CenturyLink's Ba3-PD probability of default rating (PDR), its senior unsecured rating of B2, and its senior secured rating of Ba3.
The ratings on the P&I classes were affirmed because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges. Moody's rating action reflects a base expected loss of 4.2% of the current pooled balance, compared to 4.3% at Moody's last review. Moody's base expected loss plus realized losses is now 4.1% of the original pooled balance, compared to 4.3% at the last review.
Efforts to successfully establish standalone operating systems and processes and rebuild the company's sales force were compounded by a delayed deal closing, as well as distractions caused by CenturyLink's merger with Level 3 Communications, Inc. The result has been weaker than expected revenue, margin and bookings trends and delayed cost reduction efficiencies that have extended Moody's expectations for leverage (Moody's adjusted) declining to 5.5x, a level sufficient to support our previous B1 CFR, into year-end 2021 from the previous expectation of year-end 2019. The outlook is stable.
The ratings on six P&I classes were affirmed because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges. Moody's rating action reflects a base expected loss of 4.8% of the current pooled balance, compared to 5.4% at Moody's last review. Moody's base expected loss plus realized losses is now 4.8% of the original pooled balance, compared to 5.4% at the last review.