Fitch Ratings Assigns 'AA' To Verizon Maryland's Debt Offering

Business Wire, Feb 22, 2002

Business Editors

CHICAGO--(BUSINESS WIRE)--Feb. 22, 2002

Fitch Ratings has assigned a 'AA' rating to Verizon Maryland's (VZMD) offering of $500 million 6.125% 10-year debentures. The proceeds from the offering are expected to be used to retire short-term debt and for general corporate purposes. VZMD is a wholly owned subsidiary of Verizon Communications, Inc. The Rating Outlook for Verizon Maryland is Stable.

Fitch's rating and Rating Outlook reflect VZMD's excellent credit protection measures, including strong EBITDA interest coverage and a relatively low debt-to-EBITDA ratio. Further, capital expenditures in 2002 are expected to be funded from internal sources. The company has good pricing flexibility in serving large customers and has increased pricing flexibility for special access services in certain metropolitan statistical areas. In the consumer market, VZMD's competitive profile has the potential to be enhanced once the company gains approval to offer interLATA long distance services. Although revenues from interLATA long distance will be recorded in a separate affiliate, VZMD derives competitive benefits from being able to offer bundled service offerings.

VZMD's strengths are balanced against the competitive environment in which it operates. Competitive pressures are coming from competitive local exchange carriers (CLECs), long-distance companies, wireless operators and cable television providers.