LUMEN 4.000 02/15/2027 & LVLT-FIN 4.625 09/15/2027

Lumen Technologies Inc

Credit, TMT


Publicly traded companies mentioned herein: Lumen Technologies Inc (LUMN)

Highlights

The presenter is long Lumen Technologies Inc (LUMN)’s 2027 bonds, viewing the position as a liquidity trade on low-dollar, front-dated papers across the capital structure. The company has $1.6B of debt maturities through 2027 and currently has $1.5B of cash on its balance sheet in addition to $956MM of revolver capacity. LUMN is also benefiting from AI-driven demand, with management announcing $5B worth of deals with AI hyperscaler customers and an incremental $7B worth of deals currently in discussions. The presenter estimates that the $5B of deals can contribute $800MM - $1B of cash flow over the next couple years, with potential for $1.4B of cash flow from the $7B of deals. Based on LUMN’s cash position, revolver capacity, and potential cash flow from the new deals, the company’s maturities through 2027 should be well-covered on a liquidity basis. Yet, these unsecured papers are trading in the mid- to high-70 range and yielding in the mid-teen% range as these securities trade up to par.

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Idea Discussion

Commentor 1 - 2 weeks ago

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