Diamond Sports paper down over 1 point; TPC Group notes soft; Ligado Networks improves

By Cristal Cody

Tupelo, Miss., Jan. 18 – Diamond Sports Group LLC’s notes dropped about 1¼ points to 1¾ points in the secondary market on Tuesday after the long holiday weekend.

The bonds headed out Friday down about 2 7/8 points to 3¼ points on the week following a downgrade from S&P Global Ratings and the company’s announcement of a $600 million new money transaction and debt exchange.

Market tone was soft on Tuesday as stock indices slid over 1.5% as the day saw weaker-than-expected fourth-quarter earnings from Goldman Sachs Group Inc. and increased expectations of additional Fed rate hikes in 2022. The Nasdaq closed down 2.6%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 42 cents, or 0.49%, to $85.67.

Oil prices rallied over $1 on Tuesday after climbing over $1.50 ahead of the weekend.

The bond markets were closed on Monday in observance of the Martin Luther King Day holiday.

West Texas Intermediate crude oil benchmark futures for February deliveries settled $1.61 higher at $85.43 a barrel.

TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) were last seen trading on Friday down about 2 points on reports of a potential restructuring ahead of interest payments due in February.

In other distressed secondary action, Ligado Networks LLC’s 15½% senior secured first-lien notes due 2023 (Caa1) traded ½ point better on Tuesday.

The company’s paper remains weak so far in 2022 after trading in 2021 in the 75 bid to high 90s handle range in 2021.

The telecommunications and broadcasting/media sectors are among the main spaces that face higher default rates in 2022, according to a Fitch Ratings note on Friday.

Fitch said its overall high-yield default rate forecast for the year is 1%, but the telecommunications default rate could total 5% “if Ligado Networks files, while broadcasting/media could reach 2.5% if Diamond Sports Group LLC completes a distressed debt exchange.”

Both issuers are the largest on Fitch’s top market concern bonds list.

Diamond Sports lower

Diamond Sports’ paper continued to soften about 1¼ points to 1¾ points as the markets reopened on Tuesday, a source said.

The 5 3/8% senior secured notes due 2026 (Caa1/CC) declined about 1¾ points to 48¼ bid over the session.

The issue went out ahead of the holiday about 3¼ points down on the week.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) dropped 1¼ points to 27¾ bid by the close.

The notes were about 2 7/8 points softer over the prior week.

S&P downgraded the company on Friday following the company’s announcement of a debt exchange that S&P considers tantamount to default.

On Thursday, Diamond Sports and parent Sinclair Broadcast Group Inc. announced a $600 million new money transaction and debt exchange for two of its secured notes.

The Chesapeake, Va.-based sports broadcast group said the transaction includes 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.

TPC bonds soft

TPC Group’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) were last seen trading Friday down about 2 points near the 67¼ bid area, a source said.

The notes have dropped from the 91 bid range in November.

The Houston-based chemical manufacturer is reportedly beginning negotiations with creditors for a restructuring and is considering skipping upcoming interest payments, according to a note on Friday from Fitch Ratings.

TPC has about $50 million of payments due in February for its $153 million outstanding of 10 7/8% first-priority lien notes due 2024 and $930 million outstanding of 10½% first-priority lien notes due 2024, Fitch said.

On Jan. 7, S&P said the company has a negative outlook and faces operational challenges due to issues from storms, boiler malfunctions and an explosion at facilities going back to 2019.

Ligado notes improve

Ligado Networks’ 15½% senior secured first-lien notes due 2023 (Caa1) traded ½ point better on Tuesday at 80¼ bid, a market source said.

Ligado’s 17½% senior secured second-lien notes due 2024 (Ca) were last seen active in the secondary space a week ago at 47½ bid, about 1¾ points better since December.

The Reston, Va.-based satellite communications company’s bonds remain down from trading in the 75 bid to the high 90s range in 2021.

Distressed returns lower

Distressed index returns ended the prior week softer ahead of the holiday weekend.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return on Friday fell to minus 0.41%, compared to 0.31% on Thursday, 0.6% on Wednesday, 0.35% on Tuesday and minus 0.25% at the week’s start.

Month- and year-to-date index returns totaled 1.17% on Friday versus 1.58% on Thursday, 1.27% on Wednesday, 0.66% on Tuesday and 0.31% on Monday.

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