Charter Communications’ bank debt slipped in trading with bankers citing weaker first quarter numbers and market technicals. The cable company’s $3 billion “B” loan was seen changing hands in the 98 3/4- 99 3/8 context. while the $2 billion “A” loan rested at the 97 3/4- 98 3/8 range. Prior to the drop, Charter’s “B” loan was trading at the 99-99 1/2 level while the “A” loan was trading at 98 1/4- 98 3/4.
“[Charter’s] numbers were a little bit worse than expected [with] a registered loss of one dollar per share, a net loss of about $245 million,” one trader said. But another trader disagreed this was the cause of the slip. The company’s earnings release effect on its debt trading levels was marginal, he noted. “The general market seems to be softer, it is not only Charter.”
Traders attributed the general choppiness to fears over rising interest rates and a weakening high-yield market. The credit has sufficient crossover with high-yield, so any weakening there impacts Charter, a dealer added. The sheer size of the facility is also an issue, he said, noting that the CCC rating prevents more buyers, he said.
J.P. Morgan, Bank of America, Citigroup and Credit Suisse First Boston lead the loan, which closed last April. According to Derek Chang, Charter’s executive v.p. of finance and strategy, the transaction enabled Charter to extend debt maturities and obtain financial and operational flexibility. “We couldn’t have done this deal six months ago,” Chang explained, noting that the debt markets were very receptive. Charter officials did not return calls regarding the trading levels.