S&P cuts Charter Communications to BBB-

S&P said it reviewed its recovery and issue-level ratings for Charter Communications Inc. that were labeled as "under criteria observation" (UCO) after publishing its revised recovery ratings criteria on Dec. 7.

With the criteria review complete, the agency removed the UCO designation from these ratings and lowered all of Charter's secured debt ratings to BBB- from BBB because we it caps issue ratings for speculative-grade issuers (other than regulated utilities and real estate firms) at BBB-, regardless of the recovery rating.

This change deemphasizes the weight recovery plays in the up-notching issue ratings for issuers near the investment-grade threshold, because recovery is a smaller component of credit risk when default risk is more remote particularly considering recovery prospects may be less predictable and more variable for these issuers, the agency explained.

This revision does not reflect a change in S&P’s assessment of the company's default risk or its opinion of recovery given default.

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