S&P rates Charter notes BB-

Standard & Poor's said it assigned BB- ratings to the $750 million senior notes due 2020 expected to be issued by CCO Holdings LLC and CCO Holdings Capital Corp., subsidiaries of Charter Communications Inc.

Charter intends to use proceeds of these unsecured, publicly registered notes and borrowing under its revolving credit facility to tender for up to about $1 billion of three tranches of debt.

The recovery rating on the new notes is 3, indicating 50% to 70% expected recovery in a default.

Charter's BB- corporate credit rating and stable outlook are not affected by the proposed notes.

However, S&P said it revised the recovery rating on about $5.5 billion of existing unsecured notes of CCO Holdings and CCO Holdings Capital to 3 from 4, reflecting an expectation that sufficient second-lien debt will be tendered to improve recovery prospects for those unsecured notes.

Of the three debt tranches addressed in the tender offer, the two second-lien issues are the key targets, the agency said. The revision of the recovery rating does not affect the ratings on the notes, S&P added.

The recovery rating on the $1.8 billion of notes at CCO Holdings and CCO Holdings Capital, which are structurally subordinated to other Charter debt, remains unchanged at 6, indicating 0% to 10% expected recovery in default.

The ratings continue to reflect the company's aggressive leverage, S&P said.

Mitigating factors include its fair business profile, which benefits from favorable cable industry operating characteristics, the agency said.

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