Diamond Sports bonds slide; CWT quiet on downgrade; Washington Prime slips; Talen up

By Cristal Cody

Tupelo, Miss., June 22 – Diamond Sports Group LLC’s bonds slid more than 2 points to 3½ points in heavy secondary supply on Tuesday following parent company Sinclair Broadcast Group, Inc.’s disclosure of attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

The 5 3/8% senior secured notes due 2026 (B2/CCC+) fell nearly 2½ points to just over the 67¾ bid area on more than $34.5 million of paper traded, a source reported.

Diamond Sports’ 6 5/8% senior notes due 2027 (Caa2/CCC-) dropped 3½ points to 49½ bid on $15 million of secondary supply Tuesday.

Sinclair said in an 8-K filing with the Securities and Exchange Commission on Monday that it has entered into agreements with certain lenders and noteholders for potential interest in funding new debt and exchanging and/or repurchasing existing debt.

Sinclair said discussions are ongoing, but the company, lenders and bondholders have been unable to reach a definitive agreement.

According to SEC filings on Monday, Sinclair made two proposals to lenders and noteholders of Diamond Sports, including a March 22 proposal for $600 million of new money first priority super priority debt and up to $6.34 billion of second priority super priority debt.

In a proposal dated April 29, Sinclair proposed issuing $500 million of new money financing and a roll-up of notes into $100 million of first-lien bonds at prices between par and a 35% discount and yields from 9½% to 6.615% across three tranches.

“Since these proposals did not result in the company reaching an agreement with its creditors, we suspect that the company may continue to explore options for refinancing or restructuring transactions,” analysts at Covenant Review said in a report on Tuesday.

In February, Sinclair had reported soft guidance for Diamond Sports, along with an interest in liability management initiatives that could include a debt exchange or redemption.

CWT notes quiet

Bonds from corporate travel management company CWT, formerly known as Carlson Travel Inc., were not active in distressed secondary trading on Tuesday following the company’s ratings downgrade.

The Minneapolis-based company’s 11½% senior secured notes due 2026 (/CC/C) were last seen trading Friday at 54½ bid, a source said.

The issue traded at 57¼ bid at the beginning of 2021.

Fitch Ratings said Tuesday that it dropped the issuer’s default rating to C from CCC and also lowered ratings on its senior secured notes, including the 2026 bonds, and other debt. The downgrades reflect CWT’s missed interest payment on its second-lien and third-lien senior secured notes and an event of default following the 30-day grace period, Fitch said.

CWT entered into a forbearance agreement relating to the June 15 missed interest payments and is in discussions with lenders and bondholders.

Washington Prime declines

Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/CC) fell about 1½ points to the 71½ bid area in thin trading on Tuesday, a source said.

The notes had declined 2¼ points to the 73 bid area on $1.2 million of trading supply on Monday.

Washington Prime Group Inc. filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on June 13.

The company had been in a forbearance agreement since March 16 over a missed payment on the 6.45% notes.

The Columbus, Ohio-based shopping center real estate investment trust disclosed in February that its operating partnership withheld a $23.2 million interest payment that was due Feb. 15.

The company plans to restructure its corporate-level debt, either through a full equitization of its unsecured notes or an alternative value-maximizing transaction that would repay in full in cash all of its corporate debt.

Washington Prime has secured a $100 million non-amortizing multiple draw super-priority senior secured debtor-in-possession term loan facility from the consenting creditors to support daily operations.

Earlier in June, Fitch dropped the issuer’s default rating to D from RD, while also upgrading its senior notes to CC from C.

Talen stronger

In other distressed secondary action on Tuesday, Talen Energy Supply LLC’s bonds were seen trading more than 1 point to 2¼ points better, a source said.

Talen’s 10½% notes due 2026 (B3/CCC+/B) traded up 2¼ points to 79¾ bid on more than $2.5 million of secondary volume.

The notes had improved 1 point in the prior session on $2.5 million of supply.

The bonds traded at 91 bid at the end of May and the 89 bid area at the start of the year.

Moody’s Investors Service dropped The Woodlands, Tex., and Allentown, Pa.-based power company’s outlook to negative from stable earlier in June.

Meanwhile, oil prices drifted lower on Tuesday.

North Sea Brent crude oil futures for August deliveries edged down 9 cents to settle at $74.81 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries settled 60 cents lower at $73.06 a barrel, and August deliveries fell 27 cents to settle at $72.85 a barrel.

Overall market tone was stronger.

The iShares iBoxx High Yield Corporate Bond ETF rose 7 cents to finish the day at $87.66.

The S&P U.S. High Yield Corporate Distressed Bond index kicked the week off up 0.29% on Monday. The index has month-to-date total returns of 2.05% and year-to-date total returns of 27.06%.

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