S&P rates Charter notes BBB-

S&P said it assigned its BBB- issue-level rating and 1 recovery rating to the planned senior secured notes to be issued by Charter Communications Operating LLC and downgraded CCO Holdings LLC’s unsecured notes. The 1 recovery rating indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery in default.

The issuer lowered the issue-level rating on unsecured debt issue at CCO Holdings to BB- from BB, with a 6 recovery rating, indicating an expectation for minimal recovery (0%-10%; rounded estimate: 0%).

“The issue-level downgrade was caused by a recent shift in the funding mix toward secured debt. As a result, recovery prospects for unsecured lenders have diminished below 10% under our stressed default scenario because a greater amount of secured claims leaves less value available to unsecured creditors in a hypothetical default,” S&P said in a press release.

The company plans to use the proceeds for general corporate purposes, including to fund share buybacks and repay debt.

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