Adelphia Communications' bank debt ticked up from 99 3/8 to 99 7/8 in response to an upgrade from Moody's Investors Service, while competitor Charter Communications traded off a bit at 98 7/8. A market player said that Charter, usually a neck and neck competitor with Adelphia, may have traded down slightly as its ratings remained at Ba3, a notch below Adelphia. Other traders suggested portfolios thick with Charter might have traded out for a piece of its competitor. One source said roughly $2.5 million of Adelphia changed hands midweek with an institutional account as the buyer. Calls to officials at the companies were not returned by press time.
The secondary market has taken a liking to the cable industry recently compared to other sectors as investors view cable as safe and defensive. The newfound popularity, coupled with a lack of new issue, may explain rising levels, one trader explained. In December, Charter Communications was trading at 98 1/4 and Adelphia Communications traded up to 98 1/2. (LMW, 12/8).
Russell Solomon, analyst at Moody's, said Adelphia had a B2 rating before the upgrade to Ba2 because of the company's heavy debt load. After raising roughly $3 billion in equity there has been a dollar-for-dollar reduction of debt and build up of cash balances-- a move providing cushion for lenders, he explained.