Fitch Affirms BellSouth Telecommunications Senior & Discount Notes.CHICAGO -- BellSouth Telecommunications Inc.'s 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. , $13.4 million senior notes are affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. at 'A' by Fitch. In addition, the BellSouth Telecommunications Inc.'s sale and leaseback $45 million discount notes are affirmed at 'A+' by Fitch. The senior notes are affirmed following Fitch's affirmation of BellSouth Corporation's (BellSouth) senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. and removal from Rating Watch Negative. 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 10 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 10 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 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 policy, provided by 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 (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. The rating of the discount notes is entirely dependent upon the rating of RVI, which was affirmed by Fitch July 25, 2006 'A+'. However, the Rating Outlook was revised to Negative due to the challenging conditions in the residual value insurance market that resulted in a 42% decline in RVI's net premiums written in 2005. For more information, see Fitch's Sept. 21, 2006 release 'Fitch Affirms AT&T and BellSouth's IDRs at 'A'; Outlook Stable', and the July 25, 2006 release 'Fitch Affirms RVI's IFS at 'A+'; Outlook Revised to Negative. 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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