Home Point withers; Diamond Sports lower; China bonds deteriorate; Peabody better

By Cristal Cody

Tupelo, Miss., Sept. 7 – Mortgage provider Home Point Capital Inc.’s 5% senior notes due 2026 (B3//B-) sank another 1¾ points on Tuesday after finishing the prior week down about 1¼ points to 1½ points.

Sports broadcaster Diamond Sports Group LLC’s paper opened the week about 1¼ points softer.

Chinese bonds remained pressured on Tuesday following further downgrades of China Evergrande Group.

Fantasia Holdings Group Co. Ltd.’s 10 7/8% senior notes due 2023 (B/B+) slid 2 points.

China Evergrande subsidiary Tianji Holding Ltd.’s 11½% senior notes due 2022 (C//CCC) sank 3 7/8 points.

China Evergrande’s paper “appears to be deteriorating with bonds now in the high-20s, down from the low-40s two weeks ago,” according to a BofA Securities, Inc. global research note on Tuesday.

The situation, though, is expected “to have limited spillover effect beyond the Chinese real estate sector,” the note said.

Market tone in the post-Labor Day session mostly softened as volatility rose over 10%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 23 cents to $87.78.

The Chicago Board Options Exchange’s CBOE Volatility index was up over 10.5% at 18.14.

Oil futures were down 92 cents to 94 cents.

West Texas Intermediate crude oil benchmark futures for October deliveries settled down 94 cents at $68.35 a barrel.

Coal miner Peabody Energy Corp.’s notes traded up about 1 point to over 2 points on the day after the company announced the end of a tender offer.

Home Point declines

Home Point Capital’s 5% senior notes due 2026 (B3//B-) were quoted late afternoon 1¾ points softer on Tuesday at 84½ bid, a source said.

The notes have steadily declined from the 95 bid area in July after the company reported a $73.2 million loss in the second quarter.

The issue was down on the day following news on Tuesday that the Shareholders Foundation announced a lawsuit against the company over alleged securities laws violations.

The parent of mortgage originator and service provider Homepoint is based in Ann Arbor, Mich.

Diamond Sports softens

Diamond Sports’ 5 3/8% senior secured notes due 2026 (B2/CCC) ended the session off about 1¼ points at 67 bid, a source said.

Secondary supply was thin.

S&P Global Ratings downgraded Diamond Sports and parent Sinclair Broadcast Group Inc. in August.

In June, Sinclair reported unsuccessful attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

Sinclair announced in August that DISH Network Corp. dropped its broadcast and tennis TV stations.

Chinese bonds drop

Chinese distressed bonds remained pressured on Tuesday following further ratings downgrades.

China-based property developer Fantasia Holdings Group’s 10 7/8% senior notes due 2023 (B/B+) slid 2 points to 50 bid on $4 million of trading supply, a source said.

Tianji Holding’s 11½% senior notes due 2022 (C//CCC) sank 3 7/8 points to 21¾ bid on over $3.7 million of volume during the session.

The company is the Hong Kong-based overseas financing arm of Hengda Real Estate Group Co. Ltd., a subsidiary of Shenzhen, Guangdong, China-based real estate developer China Evergrande Group.

Moody’s Investors Service said Tuesday that it downgraded China Evergrande, Hengda Real Estate, Tianji and Scenery Journey Ltd.

China Evergrande’s dollar bonds have weakened more than 40 points since June.

Peabody improves

Peabody Energy’s notes traded up about 1 point to over 2 points on Tuesday, sources reported.

The 6 3/8% senior secured notes due 2025 (Caa1/D) were more than 2 points better from Friday at 82½ bid on about $2.7 million of secondary volume.

The issue is about 3½ points higher so far in the month.

Peabody announced on Tuesday the final results for the tender offer on its 8½% notes due 2024.

The St. Louis-based coal producer had offered to buy up to $13.28 million of the notes at a price equal to 73.84. Peabody said $66,943 notes were tendered.

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