S&P Lowers Integra Telecom Ratings Again

Integra Telecom is having a tough bout with ratings analysts.

Standard & Poor’s last month switched the Portland, Ore.-based CLEC’s outlook to negative and today lowered its corporate credit and issue-level ratings by two notches to ‘CCC’ from ‘B-.’

"The downgrade reflects our heightened concern about the company's ability to meet its tightening financial covenants," said Catherine, Cosentino, Standard & Poor's credit analyst.

Integra has $1.2 billion of total funded debt outstanding. In a press release, Standard & Poor’s said Integra faces pressure to meet its tightening covenant terms, which will be difficult given the CLEC’s “high degree” of business risk and highly leveraged financials.

Standard & Poor’s predicted Integra likely will engage in distressed debt exchanges, “as have many other companies with very limited liquidity. Such exchanges would be viewed as tantamount to a selective default under Standard & Poor's criteria.”

The ratings firm also said its lowered opinion reflects “a lack of sustainable competitive advantages, low barriers to entry, continued integration risks from the acquisition of Eschelon Telecom, and exposure to potential regulatory changes longer term.”

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