Moody's Cuts Lucent to Junk Status
NEW YORK (Reuters) - Moody's Investors Service cut its debt ratings for telecommunications systems provider Lucent Technologies Inc.(NYSE:LU - news) to junk status on Tuesday, and warned it may cut them again amid weakness in the telecommunications sector and concern over Lucent's ability to raise needed cash.
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The rating agency cut Murray Hill, New Jersey-based Lucent's senior long-term debt one notch to ``Ba1,'' its highest junk grade, from ``Baa3,'' and its commercial paper, or short-term debt, to ''Not Prime'' from ``Prime-3.'' The cuts affect about $3.8 billion of Lucent debt, which has also been cut to junk status by Standard & Poor's.
Moody's said Lucent, the largest U.S. telecom equipment provider, faces a ``more protracted downturn'' in its markets. The rating agency added that it has ``increasing concern'' over Lucent's ability to sell its fiber-optic cable unit fast enough and for enough money.
Sources familiar with the matter said Lucent could raise as little as $3 billion from a sale of the unit. Lucent has a September 30 deadline to raise $2 billion to finish spinning off its Agere Systems Inc.(NYSE:AGRa - news) optical components unit.
Standard & Poor's cut its equivalent ratings for Lucent to junk on June 12. Lucent shares were lower Tuesday afternoon on the New York Stock Exchange at $5.83, down 2 cents. They have fallen 90 percent from $59.06 in the last year. |
