NEW YORK-Duff & Phelps Credit Rating Co., Chicago, assigned an investment grade rating of AA- to Pacific Bell’s $250 million issue of 10-year notes sold Aug. 15. The notes were priced at 99.3 percent of par, or face, value to yield 6.97 percent.
Proceeds of the sale will partially repay short-term debt incurred in December when the company called for redemption prior to maturity of $500 million of higher-coupon, long-term debt.
Pacific Bell, a wholly owned subsidiary of Pacific Telesis Group, which is merging with SBC Communications, will remain a separate, indirect subsidiary of SBC.
Consequently, there will be no change in its legal or capital structure. Pacific Telesis and Pacific Bell are headquartered in San Francisco.
“Although 1996 results have been quite strong, Pacific Bell’s future financial performance is expected to be pressured by the anticipated financing requirements of its PCS (personal communications services) and video strategies and accelerating competitive forces,” the Duff & Phelps report said. “Pacific Bell will need to maintain or improve its current financial performance to maintain its current credit rating.”
PCS services are expected to be provided in a market area where 31 million people live. By 1998, Pacific Bell expects to have a broadband PCS network in place reaching 160,000 customers. Pac Bell hopes to roll out its San Diego network by year’s end and other portions of California next year.
