Replies to post #2066 on Sprint Corp (fka S)

[Lotto123]

Fitch Rates Sprint Nextel's Benchmark-Sized Debt Issuance
Last update: 11/4/2011 1:50:00 PMCHICAGO, Nov 04, 2011 (BUSINESS WIRE) -- Fitch Ratings has assigned ratings to Sprint Nextel Corporation's benchmark-sized offering. This includes a 'BB/RR2' rating to the junior guaranteed unsecured notes due 2018 and a 'B+/RR4' rating to the unsecured senior notes due 2021. The company intends to use the net proceeds from the offering of the notes for general corporate purposes, which may include redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire Corporation. Fitch has also affirmed the following ratings at Sprint Nextel and its subsidiaries: Sprint Nextel Corporation (Sprint Nextel); --Issuer default rating (IDR) at 'B+'; --Senior Unsecured Credit Facility at 'BB/RR2'; --Senior Unsecured Notes at 'B+/RR4'; Sprint Capital Corporation; --Issuer default rating (IDR) at 'B+'; --Senior Unsecured Notes at 'B+/RR4'; Nextel Communications Inc. (Nextel); --Issuer default rating (IDR) at 'B+'; --Senior Unsecured Notes at 'B+/RR4'. The Rating Outlook on Sprint Nextel and its subsidiaries is Negative. The benchmarked-sized debt issuance takes a material step toward reducing the refinancing risk and improving Sprint Nextel's constrained liquidity position. Sprint Nextel has indicated requirements to raise $5 billion to $7 billion of external funding through 2013, of which $4 billion is related to refinancings of existing debt maturities in the next two years. The company's liquidity at the end of the third quarter 2011 was approximately $5 billion, including $4.0 billion in cash. The junior guaranteed unsecured notes benefit from an upstream guarantee from all material operating subsidiaries. This guarantee is subordinated in right of the subsidiary guarantees under the credit agreement. Fitch has assigned a 'BB/RR2' rating to the junior unsecured guaranteed notes, the same as the credit facility. This reflects expectations for superior recovery prospects under a bankruptcy scenario due to the relative size of the loss cushion in the waterfall analysis behind the junior unsecured guaranteed notes. The Sprint Nextel credit agreement allows sizeable carve-outs for additional senior indebtedness. The carve-outs include unsecured junior guaranteed indebtedness that is subordinated in right of subsidiary guarantees to the credit facilities not to exceed $4 billion. The unsecured junior guaranteed debt is senior to the unsecured notes at Sprint Nextel, Sprint Capital Corporation and Nextel Communications Inc. The unsecured senior notes at these entities are not supported by an upstream guarantee from the operating subsidiaries. The credit agreement additionally allows capacity for unsecured senior guaranteed indebtedness of $2 billion. This debt would benefit from the same guarantee and rank equally in right of payment to the unsecured credit facilities. Vendor financing could also be used, secured by network related infrastructure. Sprint Nextel indicated the potential for $1 billion to $3 billion of vendor financing. Consequently Fitch expects Sprint Nextel could pursue options for further debt financing that will place additional indebtedness ahead of the senior unsecured notes (no upstream guarantees) thereby diminishing recovery prospects. Under this scenario, the senior unsecured notes could then be downgraded an additional notch as the capital structure further evolves. Sprint Nextel recently amended and added an incremental $150 million to its $2.24 billion unsecured revolving credit facility that expires in October 2013. Sprint negotiated an amendment to the credit facility to give it cushion relief during the next six quarters, as iPhone-related losses would cause the company to breech the covenant at some point in 2012. The leverage ratio will reduce to 4.25 times (x) beginning in April 2012 and again to 4.00x in January 2013. Fitch expects Sprint would likely need to consider parameters for a new facility by the end of 2012 given the 2013 maturity. The ratings have limited flexibility for execution missteps, weakened core operational results, significantly higher cash requirements, or lack of expected benefits from the network modernization project. Fitch expects leverage for Sprint Nextel to peak at approximately 5.0x during 2012. Current leverage was approximately 3.3x at the end of the third quarter 2011. Clearwire also presents event risk to Sprint Nextel ratings under several circumstances. This could include Clearwire filing for bankruptcy, Sprint Nextel acquiring Clearwire, or Sprint Nextel making a material capital contribution to Clearwire. The lack of a longer term agreement with Clearwire leaves a significant strategic void in Sprint Nextel's current fourth-generation (4G) spectrum strategy. In particular, Sprint Nextel has indicated its current spectrum position is sufficient only through 2014. Fitch expects a growing sense of urgency exists between Clearwire and Sprint Nextel to find common ground on a longer-term spectrum agreement. The memorandum of understanding for the companies to collaborate on the technical specifications for their respective LTE deployments appears to be the first step. Clearwire's weak and uncertain liquidity position including funding for its LTE network remains a significant concern given Sprint Nextel's strategic ties with Clearwire. Sprint Nextel's current ratings do not consider any material capital contributions to Clearwire. Any future agreement with Clearwire for 4G spectrum and capacity that would require material cash contributions by Sprint Nextel for a joint LTE network build outside of current capital spending expectations would likely result in a ratings downgrade. Additional information is available at ''. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research: --'Corporate Rating Methodology' (Aug. 12, 2011); --'Rating Global Telecom Companies: Sector Credit Factors' (Sept. 16, 2010); Applicable Criteria and Related Research: Corporate Rating Methodology Rating Global Telecoms Companies - Sector Credit Factors ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE ''. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. SOURCE: Fitch Ratings Fitch Ratings Primary Analyst Bill Densmore, [phone] Senior Director Fitch, Inc. 70 W. Madison St. Chicago, IL 60602 or Secondary Analyst David Peterson, [phone] Senior Director or Committee Chairperson John Culver, [phone] Senior Director or Media Relations Brian Bertsch, New York, [phone] [e-mail] Business Wire 2011

[Boxseed1]

With the money the took out will it effect the stock negatively?

[Lotto123]

Nah, these pro companies know that as they increase the market cap at times they don't do a ton to affect the pps as they need the pps for securing loans also....