Bonds issued by Altice International suffered a historic drop on Monday, following a controversial financial maneuver by the telecom giant over the weekend. The company's announcement to shift significant assets away from its creditors triggered a sharp sell-off in its debt securities.
A Dramatic Plunge in Bond Prices
Data compiled by Bloomberg showed the company's euro-denominated, first-lien notes due in August 2029 fell sharply by as much as 9 cents to 66 cents on the euro. The reaction was even more severe for the riskier, second-lien bonds. Those notes, due in January 2028, witnessed their largest intraday drop since being issued, tumbling over 16 cents to just 19 cents on the euro.
The Asset Shift That Sparked the Crisis
The market turmoil stems from an announcement made by Altice International after markets closed on Friday. The company, founded by billionaire Patrick Drahi, stated it had reclassified two major subsidiaries as "unrestricted." These subsidiaries are Altice Portugal SA, which holds all its Portuguese operations, and Altice Caribbean Sarl, housing its business in the Dominican Republic.
This critical reclassification means these profitable units are no longer bound by the terms of the group's existing credit agreements. They are now free to take on new debt, sell assets, or pay dividends without requiring approval from Altice International's lenders. The company has already acted on this new freedom. One division within Altice Portugal has raised €750 million (approximately $872 million) in new debt. This money will be used to cover upcoming liabilities of Altice International and for general working capital.
Analysts See a Power Imbalance
This strategic move, known in credit markets as a "drop-down," has left the group of companies bound by the original credit agreements—the "restricted group"—with essentially just Altice's Israeli operations. Analysts from Creditsights, led by Mark Chapman, described the move as a "cruel post-Thanksgiving gut-punch" for creditors.
They noted that assets contributing to 80% of the group's earnings (EBITDA) over the last twelve months have been moved out of the restricted group. "At this stage, we see Drahi as holding most of the cards, with limited scope for the creditors to fight back hard," the analysts wrote. They concluded that creditors are in a weak position, not only because key assets have been stripped away but also due to the highly uncertain valuation of all remaining assets within the group.
In a further development that underscores the company's strategy, Altice also indicated the possibility of raising an additional €2 billion in debt at the level of Altice Portugal. This would provide a significant boost to the company's overall liquidity, further strengthening its financial position in negotiations with bondholders.
