Charter Communications' bank debt sunk a couple of points after the company revised projections for its third quarter results downward. Market players said the paper traded in the 87 context immediately following the news, but it has since been moving in small pieces in the 85 1/2-86 1/2 range. The company had projected that it would see revenue growth of 13.7% in the third quarter, but it subsequently changed the outlook to 13%.
Kent Kalkwarf, cfo, reportedly announced that the revision was due primarily to a loss of subscribers. Calls to Kalkwarf were referred to a spokesman, who said that the downturn would not put Charter's credit covenants under pressure. He also noted that the company had received a speculative-grade liquidity rating of 2 fromMoody's Investors Service. An SGL-2 rating infers that the company has good liquidity and likely will be able to meet its obligations over the next 12 months through internal resources.
Moody's, meanwhile, has placed Charter on review for a possible downgrade, citing high financial leverage, the need for large amounts of capital expenditure and the fear that slowing cash-flow growth could block the company's ability to meet future financial expectations.