Moody’s cuts Lucent to ‘junk status’

By : |June 26, 2001 0

NEW YORK: Moody’s Investors Service cut its debt ratings for
telecommunications systems provider Lucent Technologies Inc. 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

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 Lucent’s $3.8 billion
debt that has also been cut to junk status by Standard & Poor’s.

Moody’s said Lucent, the largest US 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. 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 dropped 90 per cent from $59.06 in the last year.

(C) Reuters Limited 2001.

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