UBS Warburg recently placed a $500 million private hybrid ABS/corporate financing for telecom company Qwest Communications and start-up Calpoint, according to market sources.

The deal, called Calpoint Receivables, securitizes contractual monthly payments due to Calpoint from Qwest. The triple-B rating of the deal is based entirely upon Qwest's corporate debt rating.

The debt financing was derived from a transaction between Calpoint and Qwest, where Qwest has agreed to purchase for the next five years at least $10 million per month worth of Calpoint's "managed wavelength services," which Qwest will then offer as part of its existing product line. Via the proceeds of the securitization, Calpoint will purchase approximately $300 million worth of equipment from Qwest.

The deal essentially allowed Calpoint to issue investment-grade debt. "Using other people's credit to borrow money is not a new idea," one source said. "What is different about this deal are the parties involved."

According to a source familiar with the situation, the transaction is structurally not much different than a sale-leaseback deal. However, the transaction is not secured by real estate.

That source pointed out the likelihood that more transactions like this one will come to light as companies become more savvy in their quests for funding. However, deals like these often happen behind the scenes.

This arrangement between Qwest and Calpoint, however, raised eyebrows in the equity investment community, which disagreed with Qwest's plan to book $200 million of the equipment sale on its balance sheet as upfront revenue. Last week Qwest revised how it would treat the sale, factoring it into the company's expense calculations over the term of the deal, according to published reports. Contacts at Qwest did not return phone calls.

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