NEW YORK, Feb 12 (Reuters) - Certain bonds of Charter Communications soared after the cable operator said on Thursday it will file for Chapter 11 bankruptcy protection, as investors bet that the bonds may recover most of their value.
Charter Communications, which is controlled by Microsoft co-founder Paul Allen, said in a statement it would file for Chapter 11 on or before April 1 after it reached a deal with some of its creditors helping to reduce its debt by around $8 billion.
The company had a debt load of around $21 billion as of Sept 30. For details, see
When a company files for bankruptcy, its lenders lay claim to its assets with the most senior noteholders having first claim.
Charter's 10.25 percent bonds due 2010, which sit below the company's loans but above other bondholders, jumped 28 cents after the bankruptcy plan was announced to 78.5 cents on the dollar, according to MarketAxess.
'The 10.25 percent bonds are the sweet spot in the capital structure below which all paper is near worthless or worthless and above which all the paper is fully covered,' said Oren Cohen, principal at Brownstone Asset Management in New York.
'That's where the most juice is, if you get it right you get the most upside,' he added.
(Reporting by Karen Brettell; editing by Gary Crosse) Keywords: CHARTER BONDS/ (karen.brettell@thomsonreuters.com; +1-646-223-6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Charter Communications, which is controlled by Microsoft co-founder Paul Allen, said in a statement it would file for Chapter 11 on or before April 1 after it reached a deal with some of its creditors helping to reduce its debt by around $8 billion.
The company had a debt load of around $21 billion as of Sept 30. For details, see
When a company files for bankruptcy, its lenders lay claim to its assets with the most senior noteholders having first claim.
Charter's 10.25 percent bonds due 2010, which sit below the company's loans but above other bondholders, jumped 28 cents after the bankruptcy plan was announced to 78.5 cents on the dollar, according to MarketAxess.
'The 10.25 percent bonds are the sweet spot in the capital structure below which all paper is near worthless or worthless and above which all the paper is fully covered,' said Oren Cohen, principal at Brownstone Asset Management in New York.
'That's where the most juice is, if you get it right you get the most upside,' he added.
(Reporting by Karen Brettell; editing by Gary Crosse) Keywords: CHARTER BONDS/ (karen.brettell@thomsonreuters.com; +1-646-223-6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.