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DUFF & PHELPS RATES AMERICAN TELEPHONE AND TELEGRAPH COMPANY $400 MILLION 5.5 PERCENT EUROBONDS DUE FEB. 1, 1999

 CHICAGO, Jan. 7 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of "AA+" (Double-A-Plus) to American Telephone and Telegraph Company's (AT&T) $400 million of 5.5 percent Eurobonds due Feb. 1, 1999. The bonds are being reoffered at a price of 99.595 to yield 5.6 percent.
 AT&T's operations generate cash flow well in excess of capital expenditure requirements. This strong cash generating capacity has permitted significant reductions in the debt ratio in core businesses (those other than financial services) in recent years. The current rating assumes completion of the McCaw Cellular merger. Critical factors supporting AT&T's credit quality include the use of equity to finance the merger, the ability to refinance McCaw's $5.1 billion in debt at substantially lower rates, the commitment to use its substantial free cash flow to pay down debt, and the rapid improvements anticipated in earnings and cash flow from McCaw.
 Another important factor is the steps that AT&T has taken to insulate itself from the credit risk of its financial services operations. AT&T no longer guarantees the debt issuances of the new AT&T Capital, and in 1993 the company reduced its stake in AT&T Capital to 85 percent through a public offering.
 AT&T is the largest telecommunications company in the United States, with 1992 gross revenues of $65 billion. The company is the largest provider of long distance services in the United States 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.
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 /CONTACT: James J. Stork, CFA, of Duff & Phelps Credit Rating Co., 312-368-3125/
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CO: American Telephone and Telegraph Company ST: IN: TLS SU: RTG

TW -- NY021 -- 0085 01/07/94 10:47 EST
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Publication:PR Newswire
Date:Jan 7, 1994
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