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Reuters
UPDATE - S&P says looming debt maturities haunt telecoms
Monday April 21, 1:04 pm ET
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PHILADELPHIA, April 21 (Reuters) - About $19 billion in speculative-grade debt will come due through 2005 in the telecommunications and cable television industries, putting pressure on the already weary sectors, debt-rating agency Standard & Poor's said on Monday.
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The U.S. telephone and cable-TV sectors have about $206 billion in debt, with about $63 billion, or almost 21 percent, coming due by the end of 2005. Most of the debt was issued by large telephone companies such as AT&T Corp.(NYSE:T - News), the Baby Bells and some major wireless companies, which should be able to easily handle refinancings.
The remaining $19 billion was issued by smaller companies or carriers under financial strain and poses a threat, as "refinancing prospects range from worrisome to highly doubtful," S&P said in a report.
Much of that debt is concentrated among just a few service providers. Qwest Communications International Inc.(NYSE:Q - News) has more than $6 billion in debt coming due through 2005; Charter Communications Inc.(NasdaqNM:CHTR - News) has about $1.5 billion maturing in that time period; and Loral Space & Communications Ltd.(NYSE:LOR - News) which has $1.1 billion coming due, S&P said.
The telephone and media sectors have been under pressure over the past three years, struggling under massive debts incurred as carriers upgraded their networks to handle new technologies just as demand started to wane.
A flood of bankruptcies and defaults turned credit markets sour on the industries, making it tough for service providers to get more funding or refinance debt. Now, investors are more closely evaluating companies before providing funding.
"Upcoming maturities pose a particularly difficult challenge for weak companies, given the market's limited appetite for high-yield telecom debt and the scarcity of other funding options," S&P said in the report.
The companies face several options to refinance or pare their debt, but none of them are easy, the report said.
Options include renegotiating bank maturities, selling assets, repurchasing debt in the open market, or pursuing debt exchanges. |
