Fitch Downgrades AT&T's IDR To 'A-' From 'A'; Outlook Stable

(RTTNews) - Fitch Ratings said Wednesday that it has downgraded to 'A-' from 'A' the Issuer Default Ratings and debt security ratings for telecommunications giant AT&T Inc. (T) and its subsidiaries.

The company's Short-term IDR and commercial paper ratings have been downgraded to 'F2' from 'F1'.

The Rating Outlook is Stable, and the Negative Rating Watch has been removed.

Fitch said it has accelerated resolving the existing Rating Watch as the completion of the recent spectrum auction provides certainty as to a near term increase in leverage for AT&T. Whether or not the DIRECTV deal closes, the 'A-' level would remain the appropriate rating level even without the acquisition of DIRECTV being completed, the rating agency noted.

The Rating Outlook is Stable, given AT&T's intent to delever to a net leverage target of 1.8x over a three year period following the completion of all pending transactions, including spectrum. Fitch believes that the company is likely to reach gross leverage of approximately 2.0x, which in Fitch's view is appropriate for the 'A-' rating level, by the end of 2017.

The company's IDR and debt securities were placed on Rating Watch Negative on May 19, 2014, when AT&T announced the acquisition of DIRECTV. The transaction is pending regulatory approval and Fitch believes it has a high likelihood of going through as it has been relatively uncontroversial. DIRECTV's wholly-owned indirect subsidiary, DIRECTV Holdings LLC, has an IDR of 'BBB-'.