LPC-Altice loans wobble following weaker results

Nov 8 (Reuters) - Loan pricing in French telecom group Altice has dropped in the secondary loan market following third-quarter results, banking sources said.

The Netherlands-listed group’s €300m term loan was quoted at par on November 8, a loss of 50bp from 100.5 on November 3, while its US$900m term loan dropped marginally from last week, according to Thomson Reuters LPC data.

Secondary pricing on Altice’s French subsidiary SFR’s €1bn loan also dropped this week, with one trader marking it down by 50bp to par on Tuesday.

Altice said late on November 2 that it lost about 75,000 broadband customers in France, its biggest market, in the third quarter, with some lured by heavy promotions on offer at rivals.

This led to Altice share’s having their worst day ever on November 3, shedding more than 20% and wiping close to €6bn off the company’s market capitalisation.

The loan market is typically insulated from wider events and is usually slower to react than equities, with Europe’s secondary loans recovering quickly to the Brexit vote and barely reacting to Trump’s election win.

A drop of 50bp on Altice within the context of a few days is quite significant, sources said.

“The loan market is so strong that a drop like this is definitely a sign of weakness,” a loan trader said.

There have been rising concerns about Altice’s strategy and whether the group can keep spending at its current pace or maintain its high debt level in a rising interest rate environment.

Goldman Sachs cut its rating on the stock from “buy” to “neutral” on Tuesday, extending its price fall further. Altice’s shares are down by nearly 40% since the start of 2017.

Europe’s leveraged loan market has been plagued by a supply demand imbalance since last year, where deep liquidity has inflated the price of many credits in the secondary market.

Altice finalised its cross-border loan refinancing in October to lower the cost of its borrowings and extend maturities. The €300m tranche and US$900m 8.25-year tranches closed to pay 275bp over Euribor/Libor, with a 0% floor, 25bp tighter than initial guidance of 300bp over Euribor/Libor. (Editing by Claire Ruckin)