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Level 3 Communications (www.level3.com) announced on Tuesday it is planning an offering of $640 million in senior notes, in which it will use the proceeds to buy back $550 million in 12.25 percent senior notes due in 2013

The announcement comes at a time when the data center industry is gradually moving out of a complete credit freeze that was brought on by the recession.

UBS telecom analyst John Hodulik's theory behind Level 3's decision to buy back the notes, as cited in a report by the Denver Post, is that the bonds have a high interest rate and a restriction attached to them which would make it "less attractive for the company to acquire a firm".

"Its redemption may pave the way for further acquisitions by Level 3," Hodulik wrote in a research note. "Potential targets could include Global Crossing and XO Communications."

In other recent financing news, data center operator Peak 10 announced on Tuesday its expanded credit facility of $95 million, which the company secured from a group of banks lead by RBC Capital Markets -- an institution that has participated in many financing deals within the industry.

In November, colocation provider CyrusOne secured new credit capacity of $150 million, which was also led by RBC, in which it plans to use towards the further expansion of its data center footprint.

In September, RBC helped arrange a deal in which data center provider Switch and Data secured $100 in debt financing.

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