Traders reported some action with Charter Communications paper after Moody's Investors Service lowered multiple debt ratings on the cable operator. One trader said there have been trades in the 77-81 range, but the paper is now sticking in the high 70s. Toward the end of the week, a trader noted there was a bid of 80 for the paper. Traders declined to name any of the players involved or the size of the trades.
The downgrades were caused by growing concerns over Charter's operating performance, as supported by disclosures of disappointing third quarter results and the removal of the company's chief operating officer, David Barford. Moody's acknowledges that the negative operating trends and broader risks facing the company are greater than the agency previously thought.
Charter spokesman David Anderson, said the company is disappointed with the lower ratings. But he noted that Charter "is fully funded until 2004 and we will hit free cash flow as soon as 2004, possibly the last quarter of 2003." He declined to comment on why Moody's may have taken the decision or on the movement of the debt. Barford was placed on paid leave due to the pending status of a grand jury investigation. The bank debt traded in the 81 1/2 - 82 1/4 context following the announcement (LMW, 10/24).