Clear Channel Has More Work To Do On $21B Debt Pile

Clear Channel Communications made the most of the frothy high-yield market this week, printing a new deal to chip away at its 2016 maturity wall, which analysts last year thought could lead to a default, reports Reuters.

While the US media giant paid a price for the US$850m trade - a 10% coupon on just a 3.75-year maturity - it succeeded in convincing investors it will be able to navigate the road ahead.

"The due debt in 2016 is meaningful, but it is significantly lower than it was, say, 12 to 18 months ago," said Mitch Reznick, co-head of credit at Hermes Fund Managers.

Proceeds from the new trade will refinance its 5.5% US$408.6m senior notes maturing in 2014 and 4.9% US$241m senior bonds maturing in 2015.

While the company still has almost US$21bn of debt it needs to reduce after the refinancing, it now has nominal short-term debt until US$1.9bn of loans matures in January 2016.

"With every transaction like this that Clear Channel completes, it increases the likelihood that it will scale the 2016 maturity wall," said CreditSights analyst Karen Klapper.

"At some point, investors will focus more closely on Clear Channel's operations and its cash flow deficits," said Klapper.

"Clear Channel will need to address its highly levered balance sheet by actually repaying debt, rather than just extending maturities and pushing out its maturity wall."

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