Fitch Ratings maintained the Rating Watch Negative placement on Uniti Group Inc.'s long-term issuer default rating of B, driven in large part by increased capital market uncertainty.
The rating agency also kept the BB/RR1 rating on Uniti Group LP's senior secured revolver, term loan and notes and the B-/RR5 rating on its senior unsecured notes on Rating Watch Negative. It assigned Uniti Fiber Holdings Inc. a long-term issuer default rating of B and a B-/RR5 rating to its senior unsecured 4% exchangeable notes due 2024, both of which are also on Rating Watch Negative.
The rating agency said the adverse decision against embattled tenant Windstream Holdings Inc. creates some uncertainty surrounding the communications real estate investment trust's ability to access the debt and equity markets at reasonable cost.
"If there were disruptions in Windstream's payment under the master lease prior to its assumption or rejection, Uniti would consider further reductions in capital spending and its dividend," Fitch said.
Fitch added that Uniti's gross leverage for 2019 is likely to hover around 6.5x, assuming no reduction to the master lease. Once the overhang of the Windstream bankruptcy process is behind the company, Uniti is likely to fund future transactions such that gross leverage will stay relatively stable and should remain in the high 5x range and move to about 6x in the longer term, according to the rating agency.
