Diamond Sports lower; Wesco, PBF bonds improve; Transocean down; Zhenro declines

By Cristal Cody

Tupelo, Miss., Feb. 15 – Distressed secondary action thinned on Tuesday with a few bond issuers standing out in otherwise light trading, sources reported.

Diamond Sports Group LLC’s notes were about ½ point to 3/8 point weaker after the company announced the start of the solicitation of consents for an exchange offer.

“Seeing a couple of trades for the 5 3/8% and a couple of trades for the unsecureds, but not too much,” a market source said. “There doesn’t seem like a lot of volatility.”

Overall market volatility waned on reports Russia pulled back some of its troops from Ukraine’s border, and stock indices climbed with the Nasdaq ending 2.53% higher.

The Chicago Board Options Exchange’s CBOE Volatility index fell over 9% to 25.70.

The iShares iBoxx High Yield Corporate Bond ETF closed up 14 cents to $82.66.

New and higher-rated junk paper from issuers including Norwegian Cruise Line Holdings Ltd. saw the strongest secondary activity over the session, according to a market source.

Also in the space, Viking Cruises Ltd.’s 7% senior notes due 2029 (Caa2/CCC) fell about 1¼ points to 93¾ bid and yielding over 8%.

“There’s not a lot of movement for other distressed stuff,” a source said.

Wesco Aircraft Holdings Inc.’s 9% senior secured notes due 2026 (Caa3/CCC+) rallied over 3 points with the issue trading above par by late in the day.

Oil prices gave back some of the gains from Friday and Monday.

West Texas Intermediate crude oil benchmark futures for March deliveries declined $3.29 to settle at $90.21 a barrel.

Distressed energy paper was mixed, sources said.

PBF Energy Inc.’s 7¼% senior notes due 2025 (Caa1/B/B-) were up about 1 3/8 points by the session’s end at the 85 bid area.

Transocean Inc.’s 6.8% senior notes due 2038 (C/CCC) fell 1½ points to 57½ bid on Tuesday.

Looking at China’s distressed property developer space, Zhenro Properties Group Ltd.’s dollar bonds continued to slide after a second downgrade on refinancing concerns.

Diamond Sports dips

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) were mostly unchanged in “round lots” traded by late afternoon Tuesday, a market source said.

The issue headed out about ½ point lower at 42 bid after trading Monday about 1 point lower.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) were down 3/8 point to 25 bid in a handful of trades on Tuesday.

Company parent Sinclair Broadcast Group Inc. reported in a regulatory filing on Tuesday that Diamond Sports commenced an exchange offer for all $3.05 billion of its 5 3/8% senior secured notes due 2026.

The exchange offer expires on March 14.

Sinclair also announced Diamond Sports will conditionally redeem its 12¾% senior secured notes due 2026 on March 2.

The Chesapeake, Va.-based sports broadcast group announced on Jan. 13 a $600 million new money financing transaction and debt exchange of its term loans, as well as the 5 3/8% notes and 12¾% notes.

Wesco bonds gain

Wesco’s 9% senior secured notes due 2026 (Caa3/CCC+) were quoted at the market’s close 2 7/8 points better at 99¼ bid before the issue improved further to par ¼ bid by late in the day, sources said.

The bonds climbed over 8 points in the prior week following news reports the company hired restructuring advisers.

The Fort Worth-based aerospace supplier, acquired in 2020 by an affiliate of investment firm Platinum Equity and combined with U.K.-based aerospace and defense industry supplier Pattonair Ltd., is doing business as Incora.

Zhenro down

In China’s distressed property space, Zhenro’s 10¼% perpetual securities traded on Tuesday down 3 3/8 points at 25½ bid on $4 million of volume, a source said.

The notes dropped 6 1/8 points on Monday.

Fitch Ratings said Tuesday it downgraded the issuer to B from B+ and its senior notes to B from B+.

Zhenro announced plans to redeem $200 million of perpetual securities on March 5, Fitch said.

The company has about CNY 8.8 billion of debt maturing or putable in 2022, including $50 million in March, $217.5 million in April, CNY 1.6 billion in June, $293 million in August and $246.5 million in September, as well as CNY 1 billion of onshore bonds putable in September and CNY 1.05 billion of onshore bonds due in November, according to Fitch.

Moody’s Investors Service downgraded the issuer on Monday.

The Shanghai-based real estate development company in an announcement on Monday denied any issues and reported operations remained normal.

Distressed index soft

Distressed returns were in the negative territory as the week kicked off on Monday.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return was minus 0.43%, down from 0.38% a week earlier.

Month-to-date total returns declined to minus 1.06% on Monday from 0.29% in the same session last week.

Year-to-date returns were weaker at minus 2.57%, compared to minus 1.24% on Feb. 7.

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