S&P rates Charter notes BBB-

Standard & Poor’s said it assigned a BBB- rating and 1 recovery rating to the proposed senior secured notes to be issued by CCO Safari II LLC, a subsidiary of Charter Communications Inc., and placed the rating on CreditWatch with positive implications.

Charter Communications Operating LLC and Charter Communications Operating Capital Corp. will ultimately assume the notes if the escrow conditions are met, S&P said.

Charter Communications will use the proceeds from the notes to partially fund the acquisitions of Time Warner Cable Inc. and Bright House Networks, and for fees and general corporate purposes, the agency said.

If the acquisitions do not close, the agency said it expects the company to repay the notes and the rating on the notes will be withdrawn. The 1 recovery rating indicates 90% to 100% expected default recovery.

The recovery rating is based on a prospective view of the new company, assuming both the Time Warner and Bright House acquisitions close as proposed, S&P said.

The notes will be guaranteed by CCO Holdings LLC and all operating subsidiaries of CCO, the agency said.

The positive watch reflects a plan to raise the rating on the notes by one-notch to BBB upon the close of the transactions, S&P said.

Pro forma for both transactions, the agency said it estimates a lease-adjusted net debt-to-EBITDA ratio of about 4.8x in 2015, declining to about 4.4x to 4.5x in 2016.

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