Diamond Sports gains in heavy trading; PBF improves; Staples up; Sunac China slides

By Cristal Cody

Tupelo, Miss., Jan. 13 – Paper from Diamond Sports Group LLC traded heavily on Thursday in the distressed secondary bond market after the company announced it reached a $600 million new money transaction.

Parent Sinclair Broadcast Group Inc. tried three times unsuccessfully in 2021 to conduct a transaction.

The 5 3/8% senior secured notes due 2026 (Caa1/CCC) finished up nearly ½ point on $33 million of volume, while the 6 5/8% senior unsecured notes due 2027 (Ca/CC) rallied 1¼ points on $22 million of supply.

“A lot of trading today,” a source said. “Having that $600 million confirmed is just good news for them and sending their bonds up.”

Market tone overall was weaker with measured market volatility up more than 15% and stocks lower.

The iShares iBoxx High Yield Corporate Bond ETF closed down 31 cents to $86.17 after adding 54 cents in the prior two sessions.

Oil prices settled slightly lower on the day.

West Texas Intermediate crude oil benchmark futures for February deliveries fell 52 cents to $82.12 a barrel.

Distressed secondary activity continues to remain light so far in 2022 and focused on a handful of issuers, including Diamond Sports, according to market sources.

Secondary action was “slow” on the distressed side, a source said Thursday.

PBF Energy Inc.’s 7¼% senior notes due 2025 (Caa1/B/B-) picked up another 1¾ points on volume of over $4.5 million after trading more than 3 points better on Wednesday.

The company’s bonds are “following the equity” after Morgan Stanley on Wednesday raised the company’s stock price objective to $20 from $17, a source said.

Staples Inc.’s 10¾% senior notes due 2027 (Caa1/CCC+) added 1¼ points on over $11 million of secondary action on Thursday after picking up 1 1/8 points on over $17 million of volume in the prior session.

In China’s distressed property developer space, Sunac China Holdings Ltd.’s offshore bonds slid about 6 points over the session.

Diamond Sports active

Diamond Sports’ paper saw heavy trading on Thursday on the heels of its announcement the company had reached an agreement for a new money deal, sources said.

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) rose 1 point in heavy secondary action to 51¼ bid by the afternoon.

The notes finished up nearly ½ point near the 50¾ bid area on $33 million of paper traded on Thursday.

The secured issue declined at the start of the week and remains off the 53½ bid seen on Friday.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) also rallied 1¼ points to 29¼ bid ion $22 million of trading action.

The notes are down from 31 7/8 bid on Friday after sliding in trading at the front half of the week.

The Chesapeake, Va.-based sports broadcast group announced on Thursday that it and Sinclair entered into a transaction support agreement for a new money financing and recapitalization with various lenders holding term loans under the company’s existing credit facilities and holders of its 5 3/8% senior secured notes due 2027 and 12¾% notes due 2026.

Diamond Sports said it plans to raise $600 million in new capital and defer the cash payment of a portion of its management fee to Sinclair, which together are expected to provide about $1 billion of liquidity enhancement over the next five years.

The company tried three times unsuccessfully in 2021 to conduct a new money transaction.

Sinclair had reported that it made March 22, April 29 and Sept. 28 proposals to lenders and noteholders of Diamond Sports.

The lenders to the new agreement represent approximately 49.7% of the aggregate principal amount of the company’s existing term loans, while the noteholders to the agreement represent approximately 53.7% of the 5 3/8% secured notes and approximately 16.7% of the 12¾% secured notes.

Sinclair’s president and chief executive officer, Chris Ripley, said in the news release on Thursday the “additional liquidity gained by this incremental financing, as well as recent digital rights renewals with the NHL and NBA, enables us to proceed with our plans to launch Diamond’s direct-to-consumer offering.”

In December, Sinclair reported that Diamond Sports inked a multiple-year renewal of its distribution rights agreement with the National Hockey League.

The deal features a $600 million first-priority lien term loan credit facility due in May 2026 and new exchange credit facilities and secured notes with closing expected before March 31. Diamond Sports said it plans to start the exchange offer later in January.

PBF notes improve

PBF’s 6% senior notes due 2028 (Caa1/B/B+) and 7¼% senior notes due 2025 (Caa1/B/B-) traded higher on Thursday, sources said.

The 7¼% senior notes due 2025 picked up another 1¾ points to head out at 83 bid on secondary volume totaling over $4.5 million.

The Parsippany, N.J.-based petroleum refiner’s issue climbed over 3 points on Wednesday.

Staples notes up

Staples’ 10¾% senior notes due 2027 (Caa1/CCC+) added 1¼ points to trade at 96½ bid with over $11 million of volume seen on Thursday, market sources reported.

The issue was up 1 1/8 points on over $17 million of notes traded in the prior session.

The Framingham, Mass.-based office supply chain’s notes are up about 2¾ points this week.

Sunac bonds lower

Sunac’s paper dropped about 6 points in the secondary space on Thursday with the paper lower this week following reports the company received a court order to freeze holdings in several subsidiaries, sources said.

The company’s 7.95% senior notes due 2022 (B1/BB) fell nearly 5¾ points to trade over 60¼ bid on $3 million of supply.

The Tianjin, China-based property developer’s 7½% notes due 2024 (B1/B) declined 6 points to hit 44 bid on $1 million of paper traded.

Distressed returns climb

Distressed index returns improved by mid-week, according to the latest market data.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return rose to 0.6% on Wednesday versus 0.35% on Tuesday and minus 0.25% on Monday.

Month- and year-to-date index returns climbed to 1.27% from 0.66% on Tuesday and 0.31% on Monday.

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