Diamond Sports mixed; Diebold edges up; Lumen bonds flat to lower; Bausch declines

By Cristal Cody

Tupelo, Miss., Feb. 14 – Diamond Sports Group LLC’s bonds went out mixed on Tuesday on more than $8 million of paper traded ahead of a bond payment due Wednesday.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/C) were finishing the day on a 2 handle and down ½ point.

Diebold Nixdorf Inc.’s bonds continued to edge up following the launch of an exchange offer on Friday.

The 8½% senior notes due Oct. 15, 2026 (Ca/CCC-) traded more than ¼ point better.

Lumen Technologies, Inc.’s paper also was active with the notes flat to 2 points lower.

The trailing 12-month U.S. junk default rate stands at 1½%, the highest level since June 2020, Fitch Ratings said in a report on Tuesday.

Default rates are expected to rise toward the 3% to 3½% range by the end of the year.

A Diamond Sports default is “looming” with a bond payment coming due Wednesday, according to the note.

“We expect to see more default activity during the first quarter of 2023,” Fitch said. “Diamond Sports continues to struggle, despite having completed a large distressed debt exchange last March, and faces a Feb. 15 interest payment.”

The distressed market has grown so far in 2023 with the percentage of market concern bonds at 13.6% in February, up from 13.3% in January and December, Fitch said.

The total rose 3% from last month mainly due to the addition of Lumen Technologies to its other market at-risk list, according to Fitch’s report.

In other distressed paper, Bausch Health Cos. Inc.’s notes mostly softened.

The company’s 11% senior secured first-lien notes due 2028 went out flat.

Stocks were mixed but marginally lower on the day with volatility declining following the inflation data report. The S&P 500 index was down 0.03%.

The Labor Department reported Tuesday the Consumer Price Index rose a seasonally adjusted 0.5% in January following a 0.1% increase in December.

Over the last 12 months, the index rose 6.4%, higher than analyst forecasts of a 6.2% increase.

The iShares iBoxx High Yield Corporate Bond ETF improved 2 cents to $74.99.

The CBOE Volatility index declined 7.03% to $18.91.

Diamond Sports mixed

Diamond Sports’ bonds attracted secondary interest in the distressed market on Tuesday with more than $8 million of bonds traded, a source said.

The 5 3/8% senior secured notes due 2026 (Caa3/CCC-) rose ½ point to 10 3/8 bid on $5.5 million of volume.

The issue was up 1/8 point on Monday on $7.5 million of supply.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/C) were down ½ point, going out at 2½ bid on $3 million of trading.

Default chatter surrounding the company continued to grow on Tuesday with a debt payment coming due Wednesday.

The Chesapeake, Va.-based sports broadcast company was deconsolidated from parent Sinclair Broadcast Group Inc.’s financial statements in 2022.

Diebold Nixdorf up

Diebold Nixdorf’s 8½% senior notes due Oct. 15, 2026 (Ca/CCC-) traded more than ¼ point better on Tuesday at the 50 bid area, a market source said.

Secondary action in the issue came to $6 million.

The ATM manufacturer on Friday launched an exchange offer for all $72 million outstanding of its 8½% senior notes due April 15, 2024 for new senior secured PIK toggle notes and warrants to purchase common shares.

The exchange offer expires March 24.

The Hudson, Ohio-based financial and retail technology company also conducted exchange offers in December for the 8½% notes.

Lumen mostly lower

Lumen’s paper was active over the day with the company’s bonds mostly flat to weaker, a source said.

The 4½% notes due 2029 (B2/B+) went out unchanged on Tuesday at 57½ bid on more than $4 million of secondary action.

The notes have declined about 7 points since Wednesday.

Lumen’s 5 3/8% notes due 2029 (B2/B) dropped 2 points to 58½ bid by the day’s end on $4.2 million of notes traded.

The Denver-based telecommunications company’s paper has been under pressure since it reported fourth-quarter and fiscal 2022 losses in the prior week.

Bausch notes decline

Bausch’s notes were mostly moving lower over the session, a market source said.

The 4 7/8% senior secured notes due 2028 (Caa1/B-/B) gave back ¾ point to head out at 59½ bid on $4.5 million of volume.

Bausch’s 5% senior notes due 2029 (Ca/CCC/CC) fell 1 point to 40¾ bid on lighter trading totaling $3.9 million.

The company’s 11% senior secured first-lien notes due 2028 went out mostly flat at 74 1/8 bid on $7.3 million of volume.

Bausch’s 5¼% senior notes due 2031 (Ca/CCC/CC) also were quoted down 1¾ points at 40 bid on $2.9 million of supply on Tuesday.

The Laval, Quebec-based pharmaceutical company completed a distressed debt exchange in 2022.

Distressed index positive

S&P U.S. High Yield Corporate Distressed Bond index one-day returns started the week off in positive territory at 0.03%.

One-day returns ended Friday at minus 1.18% and were at minus 0.69% in the same session a week ago.

Month-to-date returns were 0.44% on Monday, up from 0.41% on Friday but still off the 1.12% in the week-ago session.

Quarterly and year-to-date total returns improved on Monday to 8.46% versus 8.43% on Friday but were still down from 9.2% in the same day last week.

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