Distressed action thin as CCCs hit tights; AMC, Diamond Sports, Hertz, Frontier gain

By Cristal Cody

Tupelo, Miss., April 22 – Distressed bond secondary action is not as heavy as some might have expected this year from the Covid-19 fallout that caused bankruptcies and impacted industries in 2020.

“There’s too much cash around,” a source said Thursday. “Triple Cs are all at their tights.”

CCC spreads were at 1,200 basis points in August, tightening to 800 bps in December and now are at an all-time low of 650 bps, according to a BofA Securities, Inc. research note for the past week.

CCC issuance set a new record with $25 billion of bonds priced in the first quarter, though issuance is starting to slow, according to the note.

Airlines, theaters, retail and energy sectors dominate the most negative EBITDA CCCs, BofA said.

Distressed movie theater owner AMC Entertainment Holdings, Inc.’s 10½% first-lien senior secured notes due 2025 (Caa2/CCC) were quoted about ½ point higher at 107½ bid on Thursday, up from 73½ bid at the start of the year.

The Leawood, Kan.-based company’s 12% second-lien senior secured notes due 2026 (Ca/C) were ½ point better on the day at 86¼ bid.

The notes have climbed from the 23¼ bid seen at the start of the year.

AMC reported in March that 98% of its U.S. theaters are now open.

Diamond Sports gains

Elsewhere in the CCC space, distressed sports broadcast group Diamond Sports Group LLC’s bonds improved over Thursday’s session, a source said.

The company’s 6 5/8% senior notes due 2027 (B3/CCC-) traded at 49½ bid, up from 46¾ bid on Wednesday but still off the 60½ bid range from the start of the year.

Parent company Sinclair Broadcast Group, Inc. reported in February soft guidance for the sports broadcast group and an interest in liability management initiatives that could include a debt exchange or redemption.

Moody’s Investors Service downgraded the notes in March.

NGL notes better

In distressed energy CCC bonds, NGL Energy Partners LP’s 7½% senior notes due 2026 (Caa1/CCC+) added 2½ points to trade at 88½ bid heading out, a market source said.

The Tulsa, Okla.-based diversified midstream company’s notes have climbed from trading at 65½ bid as the year opened.

Distressed offshore driller Transocean Inc.’s 11½% senior guaranteed notes due 2027 (Caa3/CCC) traded modestly better on the day at the 94 bid range and are up from 73 bid in early January.

Meanwhile, Talen Energy Supply LLC’s 6½% senior notes due 2025 (B3/CCC+/B) softened ½ point to 83 bid over the day.

The bonds are about 1 point softer from the start of the year.

Overall market tone was weaker on Thursday.

The iShares iBoxx High Yield Corporate Bond ETF slipped 16 cents to close at $87.14.

Oil prices headed up modestly after declining in the prior two sessions.

North Sea Brent crude oil futures for June deliveries rose 8 cents to settle at $65.40 a barrel.

West Texas intermediate crude oil futures for deliveries also settled up 8 cents at $61.43 a barrel.

Hertz kicks higher

In other distressed trading, Hertz Corp.’s bonds jumped higher after a new bankruptcy plan hearing was scheduled for June.

The company’s 5½% notes due 2024 hit 106¼ bid by late afternoon, a 1½ point gain from Wednesday and 5¼ points better than the same session a week ago, a source said.

The notes traded at the start of the year at 53½ bid.

Hertz filed a fourth modified Chapter 11 bankruptcy plan of reorganization and disclosure statement on Wednesday in the U.S. Bankruptcy Court for the District of Delaware.

A hearing to confirm the new plan has been scheduled for June 10, according to a notice of approval of the disclosure statement filed with the court on Thursday.

The plan implies a total enterprise value for the Estero, Fla.-based car rental operator of $5.5 billion.

Hertz filed for Chapter 11 bankruptcy on May 22, 2020.

Frontier on rise

Bankrupt Frontier Communications Corp.’s bonds continued to trade stronger in heavy secondary supply on Thursday, a market source said.

The company’s 10½% notes due 2022 rose 5/8 point to 71¾ bid.

In the same session a week ago, the notes were seen at 70¼ bid.

Frontier’s 11% senior notes due 2025 climbed to 73¾ bid from 71 5/8 bid on Wednesday and 70 bid a week ago.

The Norwalk, Conn.-based telecommunications company reported last week that it expects to emerge from Chapter 11 bankruptcy soon.

Frontier filed for Chapter 11 on April 14, 2020 in the U.S. Bankruptcy Court for the Southern District of New York.

Under the restructuring plan announced in April with unsecured bondholders representing more than 75% of the company’s approximate $11 billion of outstanding unsecured bonds, Frontier expects to eliminate more than $10 billion of debt.

Frontier said the restructuring agreement leaves unimpaired all general unsecured creditors and holders of its secured and subsidiary debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.