Fitch: Possibility of Covenant Breaches Mixed for Largest U.S. Speculative Grade Issuers.

CHICAGO -- There is a mixed likelihood of a debt covenant breach among the largest U.S. speculative grade issuers, according to a Fitch Ratings' analysis.

Fitch analyzed the liquidity position for more than 30 of the largest issuers of leveraged loans and high yield bonds. Fitch also determined how close these companies were to breaching the most restrictive covenant contained in their credit agreements or bond indentures.

Fitch's analysis found that near-term liquidity is adequate for most of these large debt issuers. A majority of these companies are still generating positive free cash flow and have ample liquidity to address their 2009 and 2010 debt maturities.

Beginning in 2011, however, many of these large debt issuers will be dependant on external financing to repay debt that comes due. While supply/demand fundamentals have been favorable for leveraged debt issuers in recent months, it is unclear if there will be sufficient demand in 2011-2014 to absorb this supply.

According to Fitch's analysis, the three speculative grade issuers closest to a covenant breach are Realogy Corporation, Chesapeake Energy Corporation and Frontier Communications Company. Among the companies reviewed (besides the few companies that have no financial covenants), First Data Corporation, Qwest Communications International, Inc. and AES Corporation had the most headroom around their covenants.

Companies covered in the report:

-- AES Corporation

-- ARAMARK Corporation

-- Biomet, Inc.

-- Chesapeake Energy Corporation

-- Clear Channel Communications, Inc.

-- Community Health Systems, Inc.

-- Constellation Brands, Inc.

-- CSC Holdings, Inc.

-- DISH Network Corporation

-- El Paso Corp.

-- First Data Corp.

-- Ford Motor Company

-- Freescale Semiconductor, Inc.

-- Frontier Communications Company

-- Harrah's Entertainment, Inc.

-- HCA Inc.

-- Intelsat, Ltd.

-- MGM MIRAGE

-- The Nielsen Company B.V.

-- NRG Energy, Inc.

-- Qwest Communications International, Inc.

-- Realogy Corporation

-- Rite Aid Corporation

-- Sprint Nextel Corp.

-- SunGard Data Systems, Inc.

-- SUPERVALU Inc.

-- Tenet Healthcare Corp.

-- Texas Competitive Electric Holdings Company, LLC 

-- Toys 'R' Us, Inc.

-- Univision Communications, Inc.

-- Windstream Corporation

The report 'Covenant Analysis of Largest Speculative Grade Issuers' is available on the Fitch Ratings' web site www.fitchratings.com and provides full liquidity analysis for each of the aforementioned issuers.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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