Charter Bonds Take Big Losses
Fourth-largest US cable operator is negotiating with bondholders to restructure debt via exchange.
December 19, 2008
Bonds of Charter Communications have taken major losses this week, as a possible bankruptcy filing looms for the cable television operator. Several tranches of the company's bonds were big losers for the week ending Dec. 18, according to Advantage Data.
The St. Louis-based company, which is the fourth-largest cable operator in the US, is in negotiations with bondholders in hopes of restructuring its debt through an exchange. Charter hired Lazard to begin the negotiations and will offer equity to some bondholders, according to several reports. It has arranged for some of its largest bondholders to get a debt-for-equity swap, but its very complex capital structure will make any exchange a difficult one.
Moody’s Investors Service lowered Charter’s probability of default rating to "Ca" from "Caa2," and Standard & Poor’s downgraded the company’s corporate credit rating to "CC" from "B-." Both rating agencies put the company on review for possible further downgrade. Fitch Ratings placed the company’s issuer default rating on Rating Watch Negative.
Numerous Charter bond tranches were among the biggest losers in secondary trading for the week ending Dec. 18. Charter’s 10.25% notes due 2010 lost 14.125 points to reach 32.5 in trading at Thursday’s opening. Its 10.25% bonds due 2013 dropped 14 points for the week ending Dec. 18 to trade at 29.625.
Charter has approximately $21 billion of debt outstanding as of the end of September.
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