Diamond Sports notes rise; Exela bonds pick up steam; Telesat paper trades higher

By Cristal Cody

Tupelo, Miss., Jan. 31 – Diamond Sports Group LLC’s bonds traded about ½ point to 1 point better after the company reported on Monday it received an extension for the solicitation start of consents for a debt exchange.

The distressed sports broadcast group’s notes were ending January down about 1½ points to 3 points since announcing the new money and debt exchange transaction earlier in the month.

Meanwhile, Exela Technologies, Inc.’s 11½% first priority senior secured notes due 2026 (Caa3/CCC-) jumped 1½ points as the company got underway with a new exchange offer after closing a distressed debt exchange in December.

The markets were a little less distressed on Monday as measured market volatility swung lower with stocks up and the Nasdaq ending the day 3.41% better.

The Chicago Board Options Exchange’s CBOE Volatility index, which dropped 9.28% to below 30 on Friday, fell another 9.76% on Monday to 24.96. The index hovered at the 17 range at the start of January.

The iShares iBoxx High Yield Corporate Bond ETF edged up 2 cents to close the day at $84.70.

West Texas Intermediate crude oil benchmark futures for March deliveries settled up $1.33 at $88.15 a barrel.

Elsewhere in the secondary market, Telesat Corp.’s paper improved about ¾ point on Monday after trading down over 4 points in the prior week.

In other distressed market action, S&P Global Ratings said Monday the global corporate default tally year to date rose to three after communications services provider Fusion Connect Inc. converted about $256 million of its senior secured first-lien term loan due 2025 into new junior convertible preferred stock.

The transaction was the second distressed exchange of 2022, according to the S&P release.

“Distressed exchanges have been the leading reason for default globally since 2017, and in 2021 they made up over 50% of all defaults,” Nicole Serino of S&P Global Credit Markets Research said in the report.

The U.S. trailing-12-month speculative-grade default rate fell to 1.5% as of Dec. 31, its lowest level since July 2014, but is forecast to hit around 2.5% by September, S&P said in a separate release.

Diamond Sports notes up

Diamond Sports’ notes were about ½ point to 1 point better on the day, a market source said.

The company’s 5 3/8% senior secured notes due 2026 (Caa1/CCC) traded up about ½ point to the 46 bid area.

The issue was ending January about 3 points lower from December.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) picked up about 1 point to head out at 26 5/8 bid.

The unsecured notes were about 1½ points weaker on the month.

The Chesapeake, Va.-based sports broadcast group announced Jan. 13 that it and parent Sinclair Broadcast Group Inc. reached a $600 million new money financing and debt exchange of its 5 3/8% senior secured notes due 2027 and 12¾% notes due 2026.

Diamond Sports had said it planned to start the exchange offer in January with closing expected before March 31.

On Monday, Sinclair Broadcast said in an 8-K filing with the Securities and Exchange Commission that Diamond Sports received consent to extend the start of the solicitation of consents for the exchange of term loans under the agreement to Feb. 4 from Jan. 28.

S&P downgraded the company earlier in January and said it considers the debt exchange tantamount to a default.

Moody’s also said the offer likely would be considered a distressed debt exchange if completed under the outlined terms.

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

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

Exela trades higher

Exela Technologies’ 11½% first priority senior secured notes due 2026 (Caa3/CCC-) climbed 1½ points to 64 bid on Monday, a source said.

The issue ended the prior week about 4 points lower and down from the 76½ bid area at the start of January.

Exela announced on Jan. 26 an offer to exchange up to 100 million shares of common stock for up to $100 million of new 6% senior notes due 2029.

The company completed a distressed debt exchange on about $1.1 billion of debt in December, “pushing the maturity wall of the majority of its debt to 2026 and substantially easing covenants on the remaining 2023 notes,” Fitch Ratings said in a report released Monday.

The Irving, Tex.-based software and services company exchanged the bulk of its 10% senior secured first-lien notes due 2023 (Caa3/CCC-) in December for the new 11½% first priority senior secured notes due 2026.

Telesat notes gain

Telesat Canada LLC’s 6½% senior notes due 2027 (Caa1/B) improved ¾ point to 62 bid on Monday, according to a market source.

The notes were up about 1¾ points on Friday but about 5¾ points lower on the week.

Telesat’s 4 7/8% senior secured notes due 2027 (B1/BB-) were nearly ¾ point better at the 81 bid range by the close on Monday.

The notes went out Friday down 2¾ points on the day and over 4 points softer on the week.

The Ottawa-based satellite communications company’s notes have been under pressure in January on financing concerns, a source said.

Telesat announced in November that subsidiaries Telesat Canada and Loral Space & Communications Inc. merged with the combined company now traded on the Nasdaq and Toronto Stock Exchange under the ticker TSAT.

Distressed returns down

Distressed returns dropped over the previous week.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return was minus 1.26% on Friday, compared to minus 0.56% on Thursday, 0.81% on Wednesday, minus 0.05% on Tuesday and minus 0.78% at the prior week’s start.

Month- and year-to-date index returns slid to minus 2.18% from minus 0.93% on Thursday, minus 0.37% on Wednesday, minus 1.18% on Tuesday and minus 1.13% on Jan. 24.

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