Frontier notes bounce back; CommScope bonds decline in strong sell-off; Lumen lower

By Cristal Cody

Tupelo, Miss., July 18 – Bonds in the distressed telecommunications and technology space stayed active in the secondary market on Tuesday.

Frontier Communications Holdings LLC’s paper again topped secondary trading for a second consecutive session but this time saw gains as the telecom space remains under pressure following news reports over potential liability from leaking lead cables and growing anticipation of regulation, sources said.

“Frontier has moved up,” a source said Tuesday. “They dropped 4 points yesterday and are bouncing back, but they’re not to the levels they were before.”

Frontier’s 6¾% senior secured second-lien notes due 2029 (Caa2/CCC+) traded up 1¾ points over the session.

CommScope Holding Co., Inc.’s bonds gave back about 1½ points to 2½ points on nearly $30 million of volume over the session after a downgrade from Deutsche Bank.

The 7 1/8% senior notes due 2028 (Caa1/CCC+) sank 2½ points.

Lumen Technologies, Inc.’s paper also was weaker among the most active distressed names on Tuesday, a source said.

Lumen’s 4% senior secured notes due 2027 (B3/BB-) fell 1¼ points.

Higher-grade U.S. telecommunications companies including AT&T Inc. and Verizon are coming under pressure on anticipation of fallout over the concern.

Markets stayed positive over the session with stocks higher and volatility waning following stronger-than-expected earnings reports from Bank of America Corp. and Morgan Stanley on Tuesday.

The reports helped offset weaker economic data. The Commerce Department reported retail sales in June edged up by 0.2%, down from the 0.5% increase in May and below the 0.5% increase market analysts expected.

The S&P 500 index rose 0.71%, the Nasdaq added 0.76% and the Dow Jones industrial average closed up 1.06%.

The iShares iBoxx High Yield Corporate Bond ETF rose 21 cents, or 0.28%, to $75.45.

The CBOE Volatility index fell 1.34% by the close to 13.3.

Frontier higher

Frontier Communications’ 6¾% senior secured second-lien notes due 2029 (Caa2/CCC+) traded up 1¾ points to 73 bid and a 13.6% yield on $19.2 million of volume on Tuesday, a source reported.

Frontier’s other bonds carrying yields just under 10% were more active.

The 8 5/8% first-lien secured notes due 2031 (B3/B) rallied 1.8 points to 94 on $22 million of trading.

The 8¾% notes due 2030 (B3/B) climbed 2 1/8 points to 94¾ on $21.7 million of volume.

Another source saw Frontier’s 5% senior secured notes due 2028 up 1¼ points in early trading at 84¼ bid and headed out 1¾ points better at 84¾ bid.

Frontier Communications Parent, Inc.’s stock (Nasdaq: FYBR) closed up 0.41% at $12.10.

CommScope drops

CommScope’s 7 1/8% senior notes due 2028 (Caa1/CCC+) sank 2½ points on the day to 66½ bid in strong trading action, a source said.

Volume totaled $13.33 million on Tuesday.

The yield was 17½%.

The 4¾% senior secured notes due 2029 (B1/B) also fell 1½ points to 77 bid and a 9.8% yield on $15 million of volume on Tuesday.

CommScope’s stock (Nasdaq: COMM) fell 1.73% to $5.11.

The network infrastructure manufacturer is based in Hickory, N.C.

Lumen notes off

Lumen Technologies’ notes were down more than 1 point in steady trading on Tuesday, a source said.

The 4% senior secured notes due 2027 (B3/BB-) fell 1¼ points to 68½ bid and a 15.89% yield on $11.8 million of trading.

Lumen’s 5 1/8% senior notes due 2026 (Caa1/CCC+) dropped 2½ points to 58 bid on $4 million of volume.

Lumen plans to post its second-quarter earnings results on Aug. 1.

Shares (NYSE: LUMN) in the Denver-based telecommunications company closed down 4.71% at $1.62.

Distressed returns soften

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns kicked the week off softer, closing Monday at minus 0.51%.

Returns were down from 0.16% on Friday and 0.15% in the same session a week ago.

Month-to-date total returns declined to 1.6% on Monday from 2.13% on Friday but were up from 0.07% the same day last week.

Year-to-date distressed total returns totaled 13.42% on Monday, compared to 14% on Friday and 11.55% in the week-ago session.

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