TEXT-S&P rates Charter's subsidiaries notes 'BB-'
Aug 8 - Standard & Poor's Ratings Services said today that it assigned its 'BB-' issue-level rating and '3' recovery rating to St. Louis-based cable-TV operator Charter Communications Inc.'s proposed $1 billion senior notes due 2022, to be issued by its subsidiaries CCO Holdings LLC and CCO Holdings Capital Corp. The '3' recovery rating indicates our expectation for meaningful (50% to 70%) recovery in the event of payment default. (For the complete recovery analysis, see the recovery report on Charter, published March 29, 2012 on RatingsDirect.) We expect Charter to use most of the net proceeds from these unsecured, publicly registered notes, along with some borrowings under its revolving credit facility, to redeem the 13.5% senior notes due 2016 issued by subsidiary CCH II LLC. There were $1.15 billion of 13.5% notes outstanding as of June 30, 2012. Our ratings and financial risk assessment on the company are not affected, since we do not expect a significant change in total indebtedness, although we expect interest expense to decline modestly. Ratings on Charter continue to reflect aggressive leverage, formidable satellite and telephone company competition, and material basic video subscriber erosion. Charter's business risk does benefit from favorable cable industry operating characteristics, including good revenue visibility inherent in its subscription-based business model and the significant bandwidth capacity of its fiber/coaxial plant. The company today increased its guidance for 2012 capital expenditures to the $1.5 billion to $1.7 billion range, from the former range of $1.4 billion to $1.5 billion range. We believe the increase supports the company's strategy to upgrade customers to digital set-top boxes and high-definition digital video recorders. (For the complete corporate credit rating rationale, see the full analysis on Charter, published March 27, 2012, on RatingsDirect.) RELATED CRITERIA AND RESEARCH -- U.S. Telecom And Cable Companies' Maturities Are Manageable, But Lower-Rated Issuers Face Some Liquidity Challenges, July 23, 2012 -- U.S. Telecom And Cable Companies, Strongest To Weakest, July 13, 2012 -- U.S. Telecom And Cable Ratings Should Be Stable Overall During Weak Economic Recovery, July 13, 2012 -- A Matter of Policy: U.S. Telecom Companies Maintain High Dividend Payouts, But For How Long?, May 30, 2012 -- A Matter of Policy: U.S. Cable And Satellite-TV Companies Ratchet Up Shareholder Payouts, May 16, 2012 -- Top 10 Investor Questions: U.S. Telecom and Cable Industries, May 10, 2012 -- Assessing The Four-Notch Rating Gap Between The Two U.S. Direct-To-Home Satellite Video Operators, May 9, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 RATINGS LIST Charter Communications Inc. Corporate Credit Rating BB-/Stable/-- New Ratings CCO Holdings LLC CCO Holdings Capital Corp. $1 bil senior notes due 2022 BB- Recovery Rating 3 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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