Diamond Sports lower; PBF gives back; Evergrande paper flat; Sunac quiets; Kaisa down

By Cristal Cody

Tupelo, Miss., Jan. 14 – Diamond Sports Group LLC’s notes headed out on Friday down about 2 7/8 points to 3¼ points on the week following a downgrade from S&P Global Ratings.

The notes softened about ¼ point to ½ point in light trading over the day following gains made on Thursday when Diamond Sports and parent Sinclair Broadcast Group Inc. announced a $600 million new money transaction and debt exchange, a source said.

S&P on Friday dropped Diamond Sports and its senior secured debt to CC from CCC based on the company’s upcoming exchange offer that it considers “tantamount to default.”

S&P said it views the company’s capital structure as “unsustainable.”

BofA Securities Inc. analysts noted Friday in a research report that Diamond Sports has been on their “default watchlist for a while.”

Market tone stayed soft ahead of the long holiday weekend with stocks mixed following the release of fourth-quarter earnings reports from Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.

Earnings from other major banks are expected in the week ahead. Trading in dollar-denominated notes in the U.S., the U.K. and Japan bond markets will be closed on Monday in observance of the Martin Luther King Day holiday.

The iShares iBoxx High Yield Corporate Bond ETF fell 8 cents to $86.09.

Oil prices rallied over $1.50 on the day.

West Texas Intermediate crude oil benchmark futures for February deliveries jumped $1.70 to settle at $83.82 a barrel.

Overall trading action in the distressed space remained light on Friday, a source said.

The most active distressed issue was seen from PBF Energy Inc. with over $7.15 million of trading volume.

PBF’s 7¼% senior notes due 2025 (Caa1/B/B-) gave back 1 7/8 points but were ending the week over 5 points better after Morgan Stanley on Wednesday raised the company’s stock price objective to $20 from $17.

In China’s distressed property developer space, China Evergrande Group’s 8¾% senior notes due 2025 (C/C/C) went out mostly unchanged after softening 1½ points earlier in the day.

Sunac China Holdings Ltd.’s offshore bonds were quiet after sliding about 6 points in the prior session, a source said.

Kaisa Group Holdings Ltd.’s 9 3/8% senior notes due 2024 (C//CCC-) traded nearly 2 points lower.

Kaisa announced in December that it defaulted on four bonds.

The space saw numerous defaults in late 2021 from issuers including China Evergrande, Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd.

Diamond Sports dips

Diamond Sports’ paper edged lower in thin trading on Friday following S&P’s downgrade, a market source said.

The 5 3/8% senior secured notes due 2026 (Caa1/CC) were about ½ point softer near the 50¼ bid area.

The notes are down from 53½ bid in the same session last week.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) traded nearly ¼ point weaker at the 29 bid area on Friday.

The notes are off the 31 7/8 bid seen a week ago.

The Chesapeake, Va.-based sports broadcast group announced on Thursday that it and Sinclair entered into a transaction support agreement for a $600 million first-priority lien term loan credit facility due in May 2026 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.

Sinclair tried three times unsuccessfully in 2021 to conduct a new money transaction with Diamond Sports’ lenders and noteholders.

According to S&P’s ratings announcement on Friday, Diamond Sports has a debt burden of more than $8 billion and a negative outlook.

PBF bonds lower

PBF’s 7¼% senior notes due 2025 (Caa1/B/B-) softened 1 7/8 points to 81½ bid on Friday after rallying over most of the week, a source said.

The issue saw over $7.15 million of trading volume.

PBF’s notes were up 1¾ points in the prior session on more than $4.5 million of secondary action.

The Parsippany, N.J.-based petroleum refiner’s bonds are trading over 5 points better on the week.

Evergrande unchanged

Evergrande’s 8¾% senior notes due 2025 (C/C/C) went out Friday mostly flat at 12 bid after trading about 1½ points weaker earlier in the session, a source said.

The paper was unchanged on the week.

The issue has declined about 70 points since May and about 8¼ points since December.

Fitch Ratings and S&P Global Ratings dropped the Shenzhen, China-based real estate developer to default status in December following the end of grace periods on missed coupon payments.

Kaisa bonds lower

Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) fell nearly 2 points to the 19 bid area on Friday, a source said.

Secondary supply totaled $3 million.

The Shenzhen, China-based real estate developer announced in December that it did not make the payments due on its 6½% notes due Dec. 7, 2021, 11.95% notes due 2023, 11.7% notes due 2025 and its 11.65% notes due 2026.

Distressed index positive

Distressed index returns softened on Thursday but remained positive, according to the latest market data.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return was 0.31% on Thursday, compared to 0.6% on Wednesday, 0.35% on Tuesday and minus 0.25% on Monday.

Month- and year-to-date index returns were stronger at 1.58% on Thursday, compared to 1.27% on Wednesday, 0.66% on Tuesday and 0.31% on Monday.

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