NEW YORK-Qwest Capital Funding Inc., a wholly owned subsidiary of Denver-based Qwest Communications International Inc., was pleasantly surprised last week to find it had investors willing to purchase nearly $12 billion of its debt securities.
The company, which had planned a private placement of $3 billion, sold $3.75 billion July 25. It will use the proceeds to lower its cost of capital by refinancing short-term debt and repaying commercial paper loans.
The deal comprised $2 billion of eight-year notes priced to yield 7 percent interest; $1.25 billion of three-year notes paying 5.9 percent interest at maturity and $500 million in 20-year bonds with a yield of 7.6 percent.
As part of the second-quarter results it released July 24, Qwest said it anticipated it would need to raise an additional $1.5 billion to $2 billion in debt before becoming cash flow positive.
The carrier’s Qwest Wireless business unit recently passed the 1 million-customer mark. Qwest International said it anticipates a sub;The five-year-old Qwest only reached investment-grade status with its purchase of U S West in June 2000. The U S West operations provide a stable cash flow and embedded base of customers, while Qwest provides a nationwide fiber-optic backbone network connecting about 150 metropolitan areas, a data and Internet protocol focus and an entrepreneurial culture,” S&P’s Zappin said.
