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Bond Market News
Lumen Faces Pushback from Bondholders on Covenant Stripping
May 6, 2026
A group of bondholders in Lumen Technologies’ subsidiary Qwest Corp, has organized discussions with law firm Davis Polk & Wardwell after Lumen launched a debt swap that is expected to strip away nearly all of their existing lender protections. The proposed swap involves exchanging ~$1.64bn of Qwest bonds maturing in 2056 and 2057 for new notes at par with the same coupon and maturity. However, this will come without the covenants that currently protect bondholders. The swap requires majority bondholder consent to remove those protections and would also eliminate Qwest’s obligation to report earnings separately. Negotiations between the organized bondholder group and Lumen are reportedly focused on securing a stronger parent-company guarantee and shortening the maturity of the new bonds. Lumen has already extended the early tender deadline to May 15 from May 8, signalling that consent is not yet assured. Additionally, some bondholders believe Lumen’s earlier $5.75bn sale of its residential fiber network to AT&T constituted a covenant breach under the existing Qwest debt terms, which would ordinarily trigger a requirement to repay bondholders at par. The dispute is expected to be a significant point of leverage in the ongoing negotiations.
Lumen’s bonds traded stable. For instance, it’s 5.375% 2029s was at 97.1, yielding 6.4%
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