Frontier Communications, Hertz, Diamond Sports improve; AMC slips; Callon bonds climb

By Cristal Cody

Tupelo, Miss., March 3 – Frontier Communications Corp.’s bonds saw heavy trading in the distressed space on Wednesday.

The company’s 11% notes due 2025 traded at 58 bid, up about 5/8 point week to date, according to a market source.

Frontier reported Wednesday in a 10-K filing with the Securities and Exchange Commission that it expects to emerge from Chapter 11 bankruptcy early in 2021.

“Our Chapter 11 restructuring is expected to eliminate approximately $11 billion of debt from our balance sheet upon emergence, which will enable significant annual interest savings,” according to the 10-K filing. “We expect this will provide flexibility to reinvest in fiber upgrades at attractive returns or pursue further deleveraging.”

The company said in the filing that it now has received Public Utility Commission approvals from all the required states, except California.

Frontier announced in January that it received approval from the Federal Communications Commission for the restructuring.

The U.S. Bankruptcy Court for the Southern District of New York confirmed the company’s plan of reorganization in August. The company filed for bankruptcy on April 14, 2020.

Hertz rises

Hertz Corp.’s bonds gained on Wednesday after softening in the prior session following the company’s report of a buyout offer and filing of a joint Chapter 11 bankruptcy plan of reorganization.

The company’s 5½% notes due 2024 were quoted at 81¼ bid late afternoon after trading on Tuesday in the 78½ bid to 80½ range, a market source said.

The notes traded Monday as high as 84 bid.

Knighthead Capital Management, LLC and Certares Opportunities LLC have committed to invest up to $4.2 billion to purchase a majority and up to all of the company’s common stock after it exits bankruptcy, Hertz said in the filing with the U.S. Bankruptcy Court for the District of Delaware on Tuesday.

A hearing on the offer is scheduled for April 16.

The car rental operator, which filed for Chapter 11 bankruptcy in May, expects to exit bankruptcy in the summer.

Diamond Sports edges up

Diamond Sports Group LLC’s bonds saw improvements Wednesday after declining last week on soft 2021 guidance, according to a market source.

The company’s 5 3/8% senior secured notes due 2026 (Ba3/CCC+) rose ¼ point to 70 bid in heavy secondary volume of more than $23 million on Wednesday.

The notes are down 7 points from where the issue traded in the same session last week.

Diamond Sports Group’s 6 5/8% senior notes due 2027 (B3/CCC-) also climbed 1¼ points to 51¾ bid on $19.5 million of trading volume over the day.

In the same period last week, the notes were seen at 56½ bid.

Parent company Sinclair Broadcast Group, Inc. reported a week ago soft guidance for the sports segment and a continued interest in liability management initiatives, which could include a debt exchange or redemption.

S&P Global Ratings announced that it would view those actions as equivalent to a default.

AMC notes soften

Distressed movie theater owner AMC Entertainment Holdings, Inc.’s 5¾% senior subordinated notes due 2025 (Ca/C) fell nearly 4 points to 58¾ bid in light trading during Wednesday’s session, a source said.

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) were quoted more than 1 point softer at 77¾ bid.

The company’s notes had rallied over the prior week on the announcement that New York City will reopen theaters on March 5 at 25% capacity.

AMC announced on Tuesday that it will release fourth-quarter and year-end earnings results on March 10.

Oil, gas bonds gain

Market tone was soft as equities weakened over the session. The Nasdaq declined 2.7%.

The iShares iBoxx High Yield Corporate Bond ETF softened a second day, closing Wednesday down 28 cents, or 0.32%, at $86.69.

Distressed oil and gas bonds were higher as oil futures rose more than $1 over the day and ahead of an OPEC meeting scheduled for Thursday.

North Sea Brent crude oil futures for May delivery settled $1.37 higher at $64.07 a barrel.

West Texas intermediate crude oil for May delivery rose $1.53 to settle at $61.28 a barrel on Wednesday.

In the secondary market, Callon Petroleum Co.’s notes traded 1½ to 2¼ points better over the day, a source said.

The oil and natural gas company’s 6 3/8% senior notes due 2026 (Caa2/D) rose 1½ points to 79¾ bid.

Callon’s 6 1/8% notes 2024 (Caa2/D) headed out up 2¼ points at 89½ bid.

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