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S&P, Moody's downgrade AT&T following $85.4B Time Warner deal

S&P Global Ratings and Moody's downgraded AT&T Inc. following the completion of its $85.4 billion deal with Time Warner Inc.

S&P downgraded AT&T's corporate credit and senior unsecured debt ratings to BBB from BBB+ and removed them from CreditWatch with negative implications, where they were placed Oct. 24, 2016, while affirming all of Time Warner's ratings and removing them from CreditWatch with positive implications. The outlooks are stable.

Meanwhile, Moody's downgraded AT&T's senior unsecured ratings to Baa2 from Baa1, concluding a review initiated Oct. 24, 2016. The outlook is stable.

AT&T will have at least $180 billion in total debt pro forma for the Time Warner acquisition, making it the largest non-government-controlled, non-financial rated corporate issuer, both rating agencies said. S&P expects AT&T's 2018 pro forma debt leverage to reach about 3.5x, above the agency's 3.25x threshold for a BBB+ rating, while Moody's expects the company's gross pro forma leverage to come in at about 3.7x at year-end.

S&P's stable outlook on AT&T reflects its expectation that the company's adjusted EBITDA growth will be relatively flat. Moody's outlook reflects its expectation that AT&T's leverage will trickle down toward 3.5x over the next 12 to 18 months.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.