Fitch downgrades Charter notes, rates loan B

Fitch Ratings said it removed Charter Communications Inc.'s ratings from Ratings Watch negative, affirmed the company's CCC issuer default rating and assigned a B rating with a recovery rating of RR1 to the $6.85 billion senior secured credit facility entered into by subsidiary Charter Communications Operating LLC.

Fitch also downgraded Charter Communications Inc.'s convertible senior notes and the senior unsecured notes of five Charter subsidiaries to CCC with a recovery rating of 4 from CCC+ with a recovery rating of 3. The outlook is stable.

The ratings were originally placed on Rating Watch negative based on Charter's precarious liquidity position beyond 2006 and downward pressure on recovery prospects. Fitch believes that the steps Charter has taken to stabilize its liquidity position, namely the new credit facility and the previously announced asset sales, alleviates Fitch's liquidity concerns in 2007.

However, the agency said Charter's ratings also reflect its highly levered balance sheet, the absence of any meaningful prospects to delever its balance sheet over the current rating horizon and Fitch's belief that Charter's capital structure is increasingly unsustainable.

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