Moody’s Investor Service downgraded Sprint Nextel Corp.’s un-secured debt rating to non-investment grade, or “junk,” according to a report from the Associated Press.
The ratings agency announced Wednesday that it had moved Sprint Nextel’s debt rating from “Ba2” to “Baa3” and gave its corporate family rating an additional non-investment grade rating, a “Ba1.” Moody’s outlook for Sprint Nextel’s ratings was also negative. The agency said it upgraded the carrier’s senior unsecured revolving credit facility to “Baa2.”
The downgrade reflects the company’s “significantly weakened market position among the national wireless carriers and its continuing challenges in turning around its wireless operations amid intense competition and weak economic conditions,” Moody’s said.
Sprint Nextel shares dropped more than 11% in trading after the news.
There is no doubt Sprint Nextel is suffering. The carrier has been churning near 1 million customers each quarter amid steep financial losses. Pali Research predicts that Sprint Nextel will cut jobs next year to help reduce expenses.
Sprint Nextel joins struggling Motorola Inc., which hit junk status with Standard & Poors.
Article updated Dec. 11 to include stock information.
Sprint Nextel tumbles to ‘junk’
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