Bell Atlantic Pennsylvania Receives 'AA+' Rating from DCR

Bell Atlantic Pennsylvania (BAPA) has been assigned a 'AA+' rating by Duff & Phelps Credit Rating Co. (DCR) for its $125 million offering of 6 percent debentures due 2028. The company's strong financials, including a 12.6 times EBITDA interest coverage and 45 percent EBITDA margins, have contributed to this high rating. The rating will allow BAPA to refinance short-term debt and reduce its leverage.

Key Takeaways:

• BAPA has a strong quantitative protection factor, with an EBITDA interest coverage of approximately 12.6 times through the nine months ended September 30, 1998.
• The company generates EBITDA margins (including other income) of 45 percent, indicating a strong ability to cover its interest expenses.
• BAPA has a lower-than-average price per minute of use for interstate switched access service, which reduces the pressure for price declines and creates a more difficult competitive environment for CLECs.
• The company operates under an alternative regulation plan that expires on December 31, 2003, which classifies services into three categories: protected, nonprotected, and competitive.
• Protecting a total of $125 million offering of 6 percent debentures due 2028.
• BAPA has a subsidiary of BEL, services 6.5 million access lines in Pennsylvania and generates approximately $3.4 billion in annual revenues.

Statistics:

• EBITDA interest coverage: approximately 12.6 times
• Leverage (debt to annualized EBITDA): approximately 1.3 times
• EBITDA margins (including other income): 45 percent
• Number of interconnection agreements signed: over 98
• Number of unbundled network elements sold: over 26,000