Qwest Downgraded

Moody's Investors Services has downgraded Qwest Capital Funding's debt.

Moody's lowered Qwest Capital Funding's junk-grade debt rating to CAA-2 from CAA-1. It declined to rate $3.3 billion in new Qwest Services Corporation notes because the company did not provide audited financial statements on the transaction.

Qwest completed a swap last week of about $5.2 billion in bonds for $3.3 billion of new debt.

The move was aimed at reducing Qwest Communication's 24-and-a-half billion-dollar debt and avoiding bankruptcy.

Moody's says it will monitor all Qwest ratings until the federal government completes its investigations into the company's accounting practices and financial statements.