DBRS New Issue - BellSouth Corporation
DBRS has assigned a rating of Ap to BellSouth Corporation’s (“BellSouth” or the “Company”) recent US$2 billion debenture issue that included three tranches:
(1) US$500 million, floating-rate debentures that mature in 2007;
(2) US$800 million, 4.75% debentures that mature in 2012; and
(3) US$700 million, 6.0% debentures that mature in 2034.
The trend is Stable.
The proceeds from this debt offer are expected to refinance a portion of the US$6 billion in additional debt that the Company is expected to carry to help it finance its share of Cingular Wireless LLC’s (40% owned by BellSouth) recent US$41 billion acquisition of AT&T Wireless Services Inc. This acquisition closed near the end of October 2004.
In completing Cingular’s acquisition of AT&T Wireless, BellSouth provided approximately US$14.4 billion in funding to Cingular through an equity injection. This injection was initially funded with short-term debt and cash-on-hand which came from asset sales and through good internal free cash flow generation.
Of the additional US$6 billion in debt that BellSouth is expected to carry from this acquisition, the Company has now placed US$5 billion of it to-date through long-term debt issues (in September 2004 BellSouth issued US$3.0 billion of notes).
It was as a result of this acquisition undertaken by Cingular that DBRS downgraded BellSouth to Ap from A (high)p. (See press release dated November 1, 2004, regarding this rating action).