WorldCom shares tumble on debt downgrade rumors
biz.yahoo.com
NEW YORK, Jan 29 (Reuters) - Shares of U.S long-distance phone company WorldCom Inc. (NasdaqNM:WCOM) fell to 7-1/2 year lows on Tuesday on market rumors that debt rating agencies were about to downgrade the company's debt, although Standard & Poor's denied it was about to take such an action.
``Investors are reacting to rumors that there may be potential debt downgrades,'' said George Rodriguez, head of trading at investment firm Guzman & Co.
Shares of WorldCom were off 17.3 percent, or $2.08, at $9.92, their lowest level in nearly seven and a half years.
S&P said the rumor it may downgrade WorldCom to junk status was ``nonsense.''
``The rumors are unsubstantiated,'' said Rosemarie Kalinowski, an S&P director who follows the No. 2 U.S. long-distance telephone company. ``It's nonsense.''
Standard & Poor's rates WorldCom's senior unsecured debt ``BBB-plus,'' three notches above ``junk'' status, with a stable outlook.
Moody's Investors Service said it rates the debt ``A3,'' four notches above junk status, also with a stable outlook. That agency was not immediately available for comment.
News that fellow telecommunications provider Global Crossing Inc. (GBLXQ) filed for bankruptcy on Monday, reduced outlook from Qwest Communications International Inc. (NYSE:Q) and disappointing earnings from fiber-optic network builder Level 3 Communications Inc. (NasdaqNM:LVLT) also weighed on WorldCom's stock. |
