CBS-DEBT-ANALYST-UPDA

CBS Corp. may face an $893-million funding gap for bonds maturing next year even after slashing its dividend 81% to save cash, a Barclays Capital credit analyst said.

CBS may have to sell new debt to help pay off $1.4 billion of bonds due in July 2010, Scott Shiffman wrote in a note to clients. The company may be less likely to draw on its $3-billion revolving credit facility, which will probably have to be replaced before it expires at the end of 2010, he said.

“The first course of action would be for CBS to pursue permanent long-term debt in the public debt markets,” Shiffman said in an interview. “Given many investors’ concerns about the CBS credit, a potential new bond could have onerous terms for CBS.”

Chief Financial Officer Fred Reynolds said last month that CBS could self-fund all its debt maturities through 2012 with cash and cash flow generated by its businesses. In a Feb. 25 regulatory filing, CBS said maturities would be funded with cash on hand and future cash flow and other debt financing.

CBS declined to comment. Its shares fell 42 cents to $3.43.