Sprint Debt Upgraded by Moody’s on Better Performance, Liquidity

Pedestrians walk past a Sprint Corp. store in Washington, D.C.

Photographer: Andrew Harrer/Bloomberg

Sprint Corp.’s credit rating was upgraded by Moody’s Investors Service, which cited improved operations and liquidity at the fourth-largest U.S. wireless carrier.

Less turnover among customers and better monthly billings helped boost Sprint to B2, the fifth-highest junk rating, from B3, Moody’s said in a report Thursday.

“Despite the heavy promotional activity, profitability has remained stable due to Sprint’s cost-reduction initiatives,” Moody’s said, adding that annual savings could top $2 billion. The more solid footing “has reduced Sprint’s refinance risk and its dependence upon the often-volatile high-yield bond market,” Moody’s said. Sprint also benefits from implicit support of its parent, SoftBank Group Corp., the report said.

Ratings on unsecured notes at Sprint, Sprint Communications and Sprint Capital were raised to B3 from Caa1, and Moody’s assigned Ba2 ratings to a proposed $2 billion senior secured revolving credit facility due 2021 as well as a $1.5 billion senior secured term loan B due 2024 for the Sprint Communications unit. Clearwire Communications LLC’s unsecured exchangeable notes moved up to Ba3 from B1.

Sprint has struggled to improve its finances under Chief Executive Officer Marcelo Claure. The unprofitable carrier, based in Overland Park, Kansas, has had to borrow money using assets including airwave licenses as collateral to help finance the business. Through promotions such as half-off pricing, it has curbed subscriber defections and turned in its first annual increase in seven years.

— With assistance by Scott Moritz

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