iHeart bonds decline amid poor earnings; SandRidge bonds slip despite beating forecasts

By Stephanie N. Rotondo

Seattle, Nov. 5 – Another round of earnings was driving distressed bonds around on Thursday.

“There’s a lot of earnings coming out; I think people are digesting those,” a trader said.

iHeartMedia Inc. reported a wider loss for the quarter. In response, its bonds and bank debt took a hefty hit.

“The numbers were out and they were bad,” a trader said.

SandRidge Energy Inc. also came out with fresh numbers, posting a loss versus a profit the year before. While the figures beat estimates, the bonds declined during the session.

The oil producer’s equity, however, firmed up.

In the land of distressed preferred stocks, Fannie Mae and Freddie Mac paper ended on higher ground after Fannie reported a profit. The results came just days after Freddie reported its first quarterly loss in four years.

iHeart beaten down

iHeartMedia’s debt dove on Thursday after the company reported weak earnings.

In the bonds, a trader said the name was off anywhere from 5¾ points to 9½ points on the day.

The 11¼% notes due 2021 were at the lower end of the range, closing at 78. The 10% notes due 2018 were down the most, ending at 40½.

However, the trader noted that the latter was down in just a single trade.

As for some of the other bonds, the trader placed the 10 5/8% notes due 2023 at 75 5/8, off 7 points. The 9% notes due 2022 declined 8 points to 74¼ and the 9% notes due 2019 fell over 7 points to 76¾.

“iHeart got clobbered,” another trader said.

He said the 14% notes due 2021 were quoted down into the mid-30s from previous levels around 40. The 10% notes traded down to “just above 40” from 50 before.

“So those are down 10 to 12 points,” he said.

As for the first-priority paper, he said that was “down easily 5 points, from the lower-80s to the mid-70s, depending on the flavor.”

In the bank debt, the term loan D dropped to 77½ bid, 78½ offered from 82 bid, 83 offered, a trader said.

For the quarter, consolidated revenue was about $1.58 billion, down from around $1.63 billion in the comparable quarter in 2014.

Operating income in the third quarter was roughly $267 million, down from about $347 million in the prior year, and net loss was about $222 million, compared to a net loss of around $115 million in the 2014 quarter.

Also, consolidated OIBDAN for the quarter was around $458 million, versus about $479 million last year.

iHeartMedia is a San Antonio-based multi-platform media and entertainment company.

SandRidge earnings beat

A trader said SandRidge Energy’s bonds “got beat up” in the wake of the company’s earnings release.

He called the 8¾% second-lien notes due 2020 “down 8 points or so,” trading around 55 versus around 63 previously. The 7½% notes due 2021 fell to a 22 to 23 context, down from the mid-20s.

A second trader called the 8¾% notes “very active” and down 4½ points to 58½.

At another desk, the 7½% notes were pegged at 23 bid, off 2½ points.

However, the company’s equity (NYSE: SD) rose 3.3 cents, or 8.18%, to 43.5 cents.

The Oklahoma City-based company posted a third-quarter loss of $640.4 million, or $1.23 per share. On an adjusted basis, loss per share was 7 cents.

Analysts polled by Zacks Investment Research had forecast a loss of 11 cents per share.

Revenue was $180.2 million.

In addition to reporting the narrower-than-expected loss, SandRidge also increase its annual production guidance to 29.5 million to 30.5 million barrels of oil equivalent. That compared to previous guidance of 29 million to 30.5 million boe.

The company also announced that it was acquiring 136,000 acres in the North Park Basin Niobara Shale in Colorado.

The land was previously owned by EOG Resources, which had positive remarks to say about the plot.

Fannie posts ‘strong’ results

Meanwhile, Fannie Mae and Freddie Mac preferreds were heading higher. A trader said the gains were due in part to Fannie’s “strong earnings,” which came out Thursday.

Fannie’s (OTCBB: FNMAS) series S preferreds were up 7 cents, or 1.4%, at $5.07. Freddie’s (OTCBB: FMCKJ) series J preferreds meantime improved a nickel, or 1%, to $5.05.

The GSE reported a $1.96 billion profit for the third quarter, down from $3.91 billion the year before. Fannie intends to send a $2.2 billion dividend payment to the Treasury in December.

The trader also noted news that indicated a pending lawsuit regarding the government’s conscription of a majority of the agencies’ profits would be allowed to move forward – a “positive for shareholders,” the trader said.

Fannie’s earnings, though down year over year, were better than Freddie’s own results, which came out Tuesday.

Freddie posted a net loss of $475 million for the third quarter, which compared to a profit of $2.08 billion the year before.

The swing to the red was due to losses from derivatives used to hedge interest-rate risk. Those losses totaled $4.17 billion, up from $617 million in the previous year.

The uptick in the losses was tied to long-term interest rate declines.

On the plus side, Freddie had positive net worth of $1.3 billion, meaning it would not need to seek more help from the U.S. Treasury.

Sara Rosenberg contributed to this article

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