AMC declines in front of earnings; Carvana mixed; Consolidated Communications drops

By Cristal Cody

Tupelo, Miss., Feb. 28 – AMC Entertainment Holdings, Inc.’s notes moved lower on Tuesday ahead of the company’s after-market release of its fourth-quarter earnings report.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) declined ½ point on more than $15 million of trading following a drop of more than 1¾ points on Monday.

AMC posted wider fourth-quarter losses.

Carvana Co.’s paper also attracted strong secondary action on Tuesday with the 5 5/8% senior notes due 2025 (Caa2/CCC) down ¼ point on $14 million of trading during the session.

In other post-earnings release activity, Consolidated Communications Holdings, Inc.’s bonds were down about 6 points in heavy trading, a source said.

The fiber optic provider reported a turnaround in its earnings with losses registered for the fourth quarter and a lower EBITDA outlook for 2023.

Tone softened with stock indices down marginally on the day.

The iShares iBoxx High Yield Corporate Bond ETF fell 14 cents, or 0.19%, to $74.53.

The CBOE Volatility index decreased 1.19% to $20.70.

Elsewhere Tuesday, Fitch Ratings said it expects the trailing 12-month U.S. institutional loan default rate to increase to 2½% to 3% by the end of the year, above the 2.4% historic 2007-2022 average but below the 4½% level registered in 2020.

The trailing 12-month default rate has climbed to 1.9% from 1.6% at the end of 2022 due to “technology software provider Avaya’s bankruptcy and Riverbed Technology’s missed interest payment,” Fitch said.

Defaults have picked up over the past three months, with February tallying $4.1 billion of volume, Fitch said.

AMC moves lower

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) gave back ½ point going into the close on Tuesday ahead of the company’s earnings release, a source said.

The bonds were quoted at 51¾ bid and yielding 36% on more than $15 million of secondary volume.

In Monday's session, the issue dropped more than 1¾ points on $9.13 million of volume.

After the market closed on Tuesday, AMC reported fourth-quarter losses of $287.7 million, up from a loss of $134.4 million in the same quarter in 2021. Fiscal 2022 losses were $973.6 million, down from a loss of $1.27 billion in 2021.

The Leawood, Kan.-based movie theater owner’s stock closed off 6% at $7.14.

Carvana bonds mixed

Carvana’s 5 5/8% senior notes due 2025 (Caa2/CCC) traded down ¼ point to 61 bid in one of the most active distressed names seen Tuesday afternoon, a source said.

Secondary supply in the issue hit $14 million.

The bonds were up 1¾ points by the close on Monday.

Carvana’s 5½% senior notes due 2027 (Caa2/CCC) rallied 5 points to a quote of 51 bid on $3 million of secondary volume during the session.

The bonds were down 1½ points in the prior session.

Carvana’s 10¼% notes due 2030 (Caa2/CCC) also traded 3 7/8 points better over the afternoon at 62¼ bid, the market source said. Supply was active on $7.7 million of volume.

The Phoenix-based online car retailer’s bonds have been mixed in secondary trading since the company reported heavy fourth-quarter and fiscal 2022 losses in the prior week.

Other active issuers

Consolidated Communications, Inc.’s 6½% senior secured notes due 2028 (B3/B-) dropped 6 points to 72¼ bid on $24 million of secondary volume as one of the day’s top traded issues, a source said.

The issuer’s 5% senior secured notes due 2028 (B3/B-) also were quoted off 6 points at 66¾ bid on Tuesday.

The company announced a loss of $34.97 million for the fourth quarter of 2022, down from income of $14.96 million in the fourth quarter of 2021, while fiscal 2022 profit improved to $140.65 million from a loss of $106.69 million in 2021.

The Mattoon, Ill.-based broadband services provider also reported a lower outlook for full-year 2023 with adjusted EBITDA in the $310 million to $330 million range, down from the $413.6 million adjusted EBITDA reported for fiscal 2022.

Consolidated Communications’ shares sank about 24% to close Tuesday at $3.03.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns kicked the week off higher at 0.54%.

One-day returns were improved from minus 0.26% on Friday.

Month-to-date returns rose to 0.72% on Monday from 0.17% going into the weekend.

Quarterly and year-to-date total returns improved to 8.76% in the prior session from 8.18% on Friday.

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