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Bond Market News
Lumen’s Creditors Agree to Provide $1.2bn Debt Financing
November 2, 2023
Lumen Technologies’ creditors agreed to provide $1.2bn of financing through new long-term debt. This debt will be incurred by its Level 3 Communications unit via a long-term senior secured first lien. The agreement would see Lumen extend its maturities, alongside covenant modifications and rate increases of certain secured and unsecured debt. No further details were provided.
The announcement came along with its Q3 results that analysts noted were mixed. Revenue was at $3.64bn vs. $4.4bn a year ago. Net losses were at $78mn for the quarter vs. a net income of $578mn last year. Lumen expects a tax refund of $900mn that was earlier not included within its forecast. The CEO Kate Johnson, said that the agreement with creditors would help align their balance sheet with its current business needs. Citi notes that the proposed extension of maturities “could be viewed as a positive by the market by providing a greater runway over which the company can restructure and improve its operations”.
The initial reaction on Lumen’s dollar bonds was mixed with its 5.625% 2025s up 10% to 87.6, yielding 15.8% while its 4% 2027s fell 13% to 59.2, yielding 22.2%.
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