S&P rates Charter notes CCC-

Standard & Poor's assigned its CCC- rating to the $500 million of senior unsecured notes due 2013 of CCO Holdings LLC, an indirect subsidiary of cable television system operator Charter Communications Inc.

Proceeds of the notes will be used to repay a portion of the debt under the four secured credit facilities of Charter's subsidiaries.

S&P said all outstanding ratings of Charter were affirmed and the outlook is developing.

Although the proposed CCO notes are structurally senior to the CCC- rated debt of Charter Communications Holdings LLC, the substantial amount of priority obligations, largely in the form of secured bank debt structurally ahead of the new CCO notes, constrains the rating on these notes to two notches below the CCC+ corporate credit rating, the agency said.

In regard to the developing outlook, S&P said operating weakness, potential bank covenant problems, or negative legal developments related to an SEC investigation could trigger a downgrade. Upward rating potential exists, if Charter can demonstrate sustained favorable subscriber trends and continuing growth from enhanced services, further reduce financial pressure by improving bank covenant compliance cushion, and steadily increase discretionary cash flow to meet rising bank amortization and reduce debt.

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