U.S.-based telecommunications service provider Connect Holding II LLC (dba Brightspeed) recently completed a debt restructuring, which included about $3.65 billion of new money to help fund its fiber-to-the-home deployment. We view the transaction as distressed and tantamount to a default given the secured debt exchanges were completed at a discount to par without adequate compensation. Therefore, we lowered our issuer credit rating (ICR) on Brightspeed to 'SD' (selective default) from 'CCC'. We also lowered the issue-level ratings on the affected issues to 'D'. The 'CC' issue-level rating on operating subsidiary Embarq Corp.'s senior unsecured debt is unchanged since it was not part of the transaction. We view the debt exchanges as distressed and tantamount to a default because lenders received
