Charter Communications' new loan kept traders busy after breaking into the secondary market last Wednesday. The new "B" loan was actively traded and settled into the 995/8-997/8 range. Comparably, the new "A" tranche settled in the 981/8-985/8 context by Wednesday night. The new J.P. Morgan and Bank of America-led loan includes a $1.5 billion revolver and a $2 billion "A" loan both priced at LIBOR plus 3%. The credit also includes a $3 billion "B" tranche priced at LIBOR plus 31/4%.
Market participants had been eagerly anticipating the break of the name due to Charter's position as one of the more liquid loans in the market. There had been some question as to the ability of the company to complete such a sizable refinancing, traders said. One loan source referred to the loan as a "capacity testing transaction." There was also some concern that current investors in Charter's loan would not be able roll over their total positions in Charter's existing loans due to the company's decision to consolidate loans held at different borrowing entities--CC VI Operating Company, Falcon Cable Communications and CC VIII Operating--under its indirect subsidiary Charter Communications Operating.
There were also doubts as to whether enough existing lenders would want to roll into the Charter deal. The name had caused lenders some pain, trading at deeply discounted levels in the secondary market over the last couple of years, and still had a certain degree of risk exhibited by its credit ratings. Moody Investors' Service rates the loan at B2. In the end though, enough lenders felt it was in their best interests to roll in to the new loan, which offered a juiced-up coupon and a liquidity cushion of $1.5 billion of new second-lien notes. Citibank and Credit Suisse First Boston are leading the notes. A Charter spokesman declined comment.