DUFF & PHELPS: AMERICAN TELEPHONE AND TELEGRAPH COMPANY $2.6 BILLION NOTES (SHELF) RATED 'AA+'
CHICAGO, May 12 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `AA+' (Double-A-Plus) to American Telephone and Telegraph Company's (NYSE: T) shelf registration to sell up to $2.6 billion of notes and warrants to purchase notes. Proceeds will be used to fund investments in AT&T Universal Card Services Corp. and other units, to fund capital expenditures, to purchase common stock of McCaw Cellular Communications (NASDAQ-NMS: MCAWA), to refund existing debt, and for general corporate purposes. Duff & Phelps Credit Rating Co. reaffirmed the ratings of AT&T following a review of the potential impact of the company's planned full investment in McCaw. AT&T is expected to maintain its very high credit quality notwithstanding a temporary increase in leverage as a result of the investment. Although the 1991 NCR acquisition and the McCaw investment increase AT&T's exposure to higher risk businesses, AT&T's strong cash generating capacity has allowed significant reductions in the debt ratio of businesses other than financial services. AT&T's ability to generate cash flow beyond its needs for capital expenditures is a critical rating factor. At the end of 1992, AT&T's debt ratio excluding financial services was 25 percent, down sharply from 38 percent at the end of 1990. As a result, pretax interest coverages excluding financial services have jumped sharply in recent years. Continued strong cash flow should allow rapid retirement of any debt issued to finance the McCaw investment. AT&T's consolidated debt ratio has remained essentially flat in recent years, as the reduction in the debt ratio from core operations has been offset by growth in financial services. These businesses are appropriately leveraged at much higher levels. AT&T has taken steps to insulate itself from the credit risk of financial services operations. AT&T will no longer guarantee the future debt issuances of AT&T Capital, and the company is planning a partial public sale of its equity in AT&T Capital. AT&T is the largest telecommunications company in the U.S., with 1992 gross revenues of $65 billion. The company is the largest provider of long distance services in the U.S. and a major manufacturer of telephone switching systems, transmission equipment, and premises equipment. AT&T's NCR subsidiary sells computer products. AT&T Capital offers a range of financing and leasing services. AT&T Credit is a subsidiary of AT&T Capital. AT&T's Universal Card has grown rapidly and is now the second largest issuer of credit cards. -0- 5/12/93 /CONTACT: James J. Stork, CFA of Duff & Phelps Credit Rating Co., 312-368-3125/ (T)
CO: American Telephone and Telegraph Company ST: New York IN: TLS SU: RTG
TM -- NY095 -- 7725 05/12/93 16:13 EDT
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|Date:||May 12, 1993|
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