DISH bonds lower; AMC gives back some gains; iHeartMedia paper, CDS soften; Mallinckrodt up

By Cristal Cody

Tupelo, Miss., June 23 – Overall distressed bond trading supply thinned Friday with stocks lower and interest rate hike expectations growing, according to market sources.

DISH Network Corp.’s 5 7/8% senior notes due 2024 (B3/B-) were the most active by the afternoon on $7.5 million of trading, a source said.

The notes were down more than ¼ point.

DISH’s credit default swaps spreads tightened more than 100 basis points this week.

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) gave back 1½ points on Friday in light trading after gaining in the prior session.

The bonds had heavy trading Thursday after the company received notice that a settlement hearing over the company’s issuance of preferred stock will be held this month.

Market tone sank in the session after the Bank of England made a surprise rate hike of 50 basis points, sources reported.

Market participants also were taking in expectations of additional U.S. rate hikes after Federal Reserve chair Jerome Powell appeared before the U.S. House Financial Services Committee on Wednesday and the U.S. Senate Committee on Banking, Housing and Urban Affairs on Thursday.

Powell noted in his prepared testimony that nearly all Federal Open Market Committee participants expect to raise interest rates again by the end of the year.

The S&P 500 index closed Friday down 0.77%, while the Dow 30 lost 219 points, or 0.65%.

The iShares iBoxx High Yield Corporate Bond ETF declined 13 cents, or 0.17%, to $74.19.

Measured market volatility was higher but remained at its lowest levels since 2020. The CBOE Volatility Index increased 4.11% to 13.44.

“Markets are learning to accept that rates will be higher for longer,” according to a Confluence Investment Management note on Friday.

Meanwhile, iHeartMedia, Inc.’s 8 3/8% senior notes due 2027 (Caa1/B-) also were among the most active distressed names trading on $6 million of volume Friday, a source said.

The notes were less than ¼ point weaker in afternoon trading.

iHeartMedia’s CDS spreads widened nearly 300 bps this week.

Mallinckrodt plc’s 11½% first-lien senior secured notes due 2028 (Caa1/CCC+) traded about 4½ points better as one of the week’s biggest gainers after the company skipped interest payments due on two bonds in the prior week.

DISH mixed

DISH’s 5 7/8% senior notes due 2024 (B3/B-) traded off more than ¼ point to the 86¾ bid area on Friday, a source said.

Trading totaled $7.5 million.

DISH DBS Corp.’s 7¾% senior notes due 2026 (B3/B-) also fell ¼ point to 59¼ bid on lighter supply of $2.5 million.

CDS spreads for both DISH Network and DISH DBS firmed more than 100 bps for the week ended Wednesday, Moody’s Investors Service said.

DISH Network’s CDS spreads tightened 126 bps to 2,095 bps.

CDS spreads for DISH DBS came in 130 bps over the week to 2,375 bps.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) stayed under pressure Friday, closing down 5.2% at $6.02.

AMC paper slips

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) gave back 1½ points Friday in light trading after adding 2 1/8 points in the prior session, a source said.

The notes were quoted at 71 bid on $2.5 million of secondary action.

The issue went out Thursday at 72 1/8 bid on $28.5 million of trading after notice that a settlement hearing was set.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) fell more than ¾ point to a 71 bid handle on $4 million of trading Friday.

The issue was quoted modestly higher at 72¼ bid on $13 million of secondary action Thursday.

On Thursday, AMC received notice of a two-day settlement hearing scheduled June 29-30 in the Delaware Court of Chancery regarding a settlement in a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over the company’s issuance of preferred stock.

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) dropped 7.95% on Thursday and closed Friday down 3.84% at $4.01.

AMC’s preferred stock (NYSE: APE) had gained 7.06% in the prior session. The preferreds softened 0.55% on Friday to $1.81.

iHeartMedia weakens

iHeartCommunications, Inc.’s 8 3/8% senior notes due 2027 (Caa1/B-) traded Friday modestly softer at the 63¾ bid range on $6 million of volume, a source said.

The company’s paper has been under pressure in May and June.

iHeartCommunications’ CDS spreads widened 281 bps to 1,474 bps over the past week ended Wednesday, Moody’s said.

The San Antonio-based media broadcasting company’s stock (Nasdaq: IHRT) was 1.81% better Friday at $3.37.

Mallinckrodt higher

Mallinckrodt’s 11½% first lien senior secured notes due 2028 (Caa1/CCC+) were ending the week around 84 bid, up about 4½ points better as one of the week’s biggest gainers, according to a BofA Securities note on Friday.

The bonds had $13 million of secondary action this week.

Mallinckrodt reported June 13 in a regulatory filing that the board elected not to pay the interest payments due on two bonds, including the 11½% notes, and has 30 days before defaults are declared.

The company reported that it paid a required $16.5 million partial payment, also due on June 13, as part of its $260 million opioid-related settlement reached with federal authorities last year.

The Dublin-based pharmaceutical company just exited Chapter 11 bankruptcy on June 16, 2022.

Distressed returns soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns remained soft on Thursday at minus 0.22%, compared to minus 0.47% on Wednesday and 0.04% on Tuesday in the first session of the short holiday week.

Month-to-date total returns fell to 4.36% on Thursday from 4.6% on Wednesday and 5.09% on Tuesday.

Year-to-date distressed total returns declined to 11.3% in the prior session from 11.54% on Wednesday and 12.07% at the week’s start.

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