Altice USA (ATUS): "ABS" Sets Stage for LME
Davis Hebert, CFA - Co-Head HY Research, Head of Telecom/Media, CreditSights
Savannah Buzzeo - Analyst, Telecom/Media, CreditSights
18 July 2025
Insights into Altice USA’s asset-backed securities strategy and its implications for debt structure, investor risks, and sector trends in 2025, including:
- Key motivations behind Altice USA’s inaugural asset-backed term loan: Discover why the company is pursuing this structure, and how it sets the stage for future liability management exercises.
- Impacts on capital structure and leverage: Understand the implications for CSC Holdings’ capital structure, including increased leverage, collateral drop-downs, and risks for bondholders.
- Lightpath ABS transaction explained: Learn how the proposed $2.8 billion Lightpath ABS could reshape liquidity and debt dynamics across the Altice group.
- Bond market reaction and relative value:Examine the market’s immediate response, with a focus on price movements for front-end and long-end bonds, and what this signals for investors.
- Sector outlook and LME risks in 2025: Explore the broader cable and telecom sector landscape, highlighting why Altice USA remains an underperform-rated credit amid ongoing financial engineering and sector headwinds.
Relative Value
Long-end CSCHLD bonds leak lower on news, front-end firm. CSCHLD bonds are modestly lower on the ABS news, with the front-end relatively unchanged and the longer-end down 2 pts. On the surface, this news is credit negative, in that the structure loses collateral but retains optionality on LME. We believe discount extraction is critical for Patrick Drahi to find a more sustainable capital structure, with competitive intensity rising, limited EBITDA growth and immaterial FCF. YTD, CSCHLD bond performance has been mixed with the front-end bonds up in total return (8% to 11% for senior gtd and 22% for the 2028 unsecured), while most other bonds are down 2% for senior gtd and 6% for longer-dated unsecured. Lightpath bonds, meanwhile, are up 8%-10%, as the debt likely gets fully repaid with ABS proceeds.
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