Following last week's moves by Clear Channel to reposition the company's debts, Fitch Ratings has affirmed CC's debt ratings and calls the company's outlook "stable." In a new release, Fitch Ratings notes that it has affirmed the 'CCC' Issuer Default Rating (IDR) of Clear Channel Communications, Inc. and the 'B' IDR of Clear Channel Worldwide Holdings, Inc., an indirect wholly owned subsidiary of Clear Channel Outdoor Holdings, Inc. In addition, Fitch expects to assign a 'CCC/RR4' rating to the proposed 9.0 percent Priority Guarantee Notes (PGN) due 2019 upon issuance. The Rating Outlook is Stable.

Fitch views Clear Channel's offer to exchange up to $2 billion of term loans for new issue PGNs, as well as its concurrent pursuit of various amendments to its credit facilities, as material positives for the capital structure. Assuming the transaction is completed as proposed, it will extend $2 billion of maturities by more than three years (under Fitch's expectations that the vast majority of extending lenders will be 2016 holders), and reduce the 2016 maturity wall from $12.1 billion to $10.1 billion. This will provide the company with incremental flexibility in managing its intermediate term capital structure. One negative of the transaction is the higher coupon on the new PGNs relative to the term loan, which will increase annual interest expense by approximately $100 million.

However, consolidated interest expense could be subsequently reduced by the expiration of an interest rate swap in Sept. 2013, as well as any potential refinancing of the CCWW 9.25 percent unsecured notes.

Additionally, Fitch notes that there is a scenario where the company employs several, if not all, of its alternatives, including further dividends out of CCOH, further Clear Channel high-yield notes, further maturity extensions, small asset sales, market repayments, distressed debt exchanges (DDE), which enable it to avoid default.

However, this scenario involves some fairly aggressive assumptions and several events going in the company's favor. Therefore, Fitch believes a default is a real possibility.

Fitch's ratings concerns center on the company's highly leveraged capital structure, with significant maturities in 2016; the considerable and growing interest burden that pressures FCF; technological threats and secular pressures in radio broadcasting; and the company's exposure to cyclical advertising revenue. The ratings are supported by the company's leading position in both the outdoor and radio industries, as well as the positive fundamentals and digital opportunities in the outdoor advertising space.