Fitch Affirms BellSouth's Sr. Notes and Downgrades Discount Notes.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. takes the following actions on BellSouth Telecommunications Inc. (BellSouth): --$9.1 million sale and leaseback sale and leaseback The sale of a fixed asset that is then leased by the former owner from the new owner. A sale and leaseback permits a firm to withdraw its equity in an asset without giving up use of the asset. Also called leaseback. , senior notes affirmed at 'A'. --$45 million sale and leaseback discount notes downgraded to 'A' from 'A+'. The senior notes are affirmed following Fitch's affirmation of BellSouth's senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. at 'A' (for more information, see the press release dated July 16, 2007 on www.fitchratings.com). The discount notes are downgraded following Fitch's downgrade of RVI RVI Radio Vlaanderen Internationaal (public broadcaster of the Flemish Community in Belgium) RVI Remote Visual Inspection RVI Renault Vehicules Industriels RVI Residual Value Insurance RVI Reverse Interrupt America which primarily reflects the challenging conditions in the residual value Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. insurance market that have resulted in reduced overall premium volume in recent years. The rating of the discount notes is entirely dependent upon the rating of RVI, downgraded by Fitch on Aug. 8, 2007. The certificates are secured by the lease on a 660,000 square foot office building in Birmingham, AL. BellSouth has a bondable lease for 20 years on the property. Rental payments for the first ten years are sufficient to pay the senior notes in full. Thus, the rating on the senior notes corresponds directly to the rating of BellSouth's corporate debt rating. Rental payment ceases after the first ten years of the lease. Therefore, the discount notes will accrete to a total of $45 million, due in conjunction with BellSouth's lease expiration in 2018. The discount notes are guaranteed by a residual value insurance policy, provided by RVI America (RVI). At the end of the lease term, the borrower has the option to sell the building for $45 million and if not, RVI will buy the building and retire the discount notes. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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