Credit Firms Warn Verizon, Cut Lucent

The two big credit rating firms said Verizon Communications Inc. should reduce its dependence on volatile short-term borrowings or increase bank commitments backing the debt. Verizon, which has $12.8 billion in debt that matures in less than nine months, may see its financing costs rise if it shifts to more expensive longer-term notes.

The company backed its short- term debt with $8.5 billion in cash and bank credit commitments, which may not be enough, said Moody’s Investors Service analyst Dennis Saputo. Standard & Poor’s also said Verizon would need to reduce debt to maintain its current A-plus rating.

Separately, Lucent Technologies Inc. took a further tumble into speculative-grade territory after Moody’s cut its credit rating two notches to B2 from Ba3. Moody’s attributed the downgrade to a prolonged business downturn for the telecom equipment maker.

Shares of New York-based Verizon fell $1.42, or 3%, to $45.61 on the New York Stock Exchange, their lowest level in a month.

Lucent shares fell 20 cents, or 4.2%, to $4.59 on the NYSE. The company’s 7.25% notes due in 2006 fell two points to 82.