Lumen paper soft; Level 3 improves; DISH bonds move higher; AMC loving Barbie

By Cristal Cody

Tupelo, Miss., July 31 – Paper from Lumen Technologies, Inc. and subsidiary Level 3 Financing, Inc. traded in strong activity in the distressed secondary market on Monday in front of its second-quarter earnings release expected Tuesday.

Lumen’s notes mostly softened. The 7.6% notes due 2039 (Caa1/CCC+/B-) declined 1 3/8 points.

Level 3’s 4 5/8% senior notes due 2027 (B1/B) were up ½ point.

DISH Network Corp.’s bonds continued to gain on Monday after going out higher on Friday.

DISH’s notes were up about ¼ point to ¾ point on about $24 million of paper traded on Monday.

On Friday, DISH’s bonds traded over ½ point to more than 1 point higher on volume totaling more than $53 million.

Market tone stayed positive at the start of the week.

The S&P 500 index improved 0.15%.

The iShares iBoxx High Yield Corporate Bond ETF rose 18 cents, or 0.24%, to $75.50.

Volatility was higher. The CBOE Volatility index increased 2.25% to 13.63.

Corporate earnings season remains in peak with more than 2,500 companies expected to release results this week, according to a note from Christine Short of Wall Street Horizon.

Those connected to Barbie are finding growing sales.

Companies with Mattel licensing deals “are already predicting a bump in sales thanks to movie-related merchandise,” Short said. “Mattel itself reported last week. Company guidance for the second half of the year included significant growth for Barbie-related sales, both from licensing deals and Barbie toy and merchandise sales. Crocs also reported last week, beating estimates and recording 11% YoY growth on the top and bottom-line, and a record for quarterly revenue which topped $1B. Robust results were in part due to the popularity of their limited edition Barbie clog which sold out on the day of its debut.”

On Monday, AMC Entertainment Holdings, Inc. reported its best admissions-revenue week in the company’s 103-year history, bolstered by the “Barbenheimer phenomenon.”

AMC Entertainment’s paper softened in thin trading on Monday but have held onto gains made in the prior week following a setback in a shareholder settlement.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) fell about ½ point over the day but were unchanged from where the issue went out nearly 7 points higher in the same session a week ago.

Lumen, Level 3 active

Lumen Technologies’ bonds were the most active distressed issue seen trading over the session, a source reported.

The company’s 4% senior secured notes due 2027 (B3/BB-/BB) were heavily traded on $14.5 million of secondary supply.

The bonds went out at 66 bid and a 17.235% yield.

Lumen’s 7.6% senior notes due 2039 (Caa1/CCC+/B-) declined 1 3/8 points to 36 bid and a 22.4% yield on $5.27 million of trading over the day.

Meanwhile, Level 3 Financing’s 4 5/8% senior notes due 2027 (B1/B) traded up ½ point to 76¼ bid on $12.55 million of volume on Monday.

Lumen’s credit default swap spreads softened 110 basis points in the prior week and 679 bps a week earlier.

Lumen will post its second-quarter earnings results on Tuesday.

Shares (NYSE: LUMN) in the Denver-based telecommunications company traded 1.7% higher on Monday at $1.79 in strong activity.

DISH bonds stronger

DISH DBS Corp.’s 5 1/8% senior notes due 2029 (Caa2/B-) were up ½ point at 50¾ bid and a 19.68% yield on $9.15 million of trading on Monday as the session wound down, a source reported.

The notes traded Friday more than 1 point higher.

DISH DBS’ 7¾% senior notes due 2026 (Caa2/B-) continued to improve and went out up ¾ point to 64½ bid on $8.6 million of activity on Monday.

The issue added 1¼ points on Friday.

DISH announced Wednesday a partnership with Amazon.com Inc. to offer wireless talk, text and data services.

Moody’s Investors Service also on Wednesday downgraded the company and noted the potential for a distressed debt exchange.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) closed Monday up 1.8% at $7.93 in light trading.

AMC notes dip

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) fell about ½ point on Monday to 68¾ bid and a 26% yield on $2.29 million of secondary activity, a source said.

The bonds have held onto gains made in the same session last week when the issue rallied 6¾ points to 68¾ bid on $15 million of trading following a setback in a shareholder settlement.

AMC reported Monday its strongest weekend movie attendance yet, thanks to movies including Barbie and Oppenheimer at its Thursday through Sunday weekend period.

Last week, the company reported that it received notice on July 21 the Delaware Court of Chancery had denied its settlement plans in a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over its issuance of preferred stock.

The company filed an addendum to the stipulation to address the issues raised by the court and requested approval with the revised release.

AMC chief executive officer Adam Aron also issued an open letter to investors and said it was important the company be able to raise fresh equity since it faces a risk of running out of cash in 2024 or 2025.

AMC plans to release its second-quarter results after the market closes on Aug. 8.

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) closed up 7.11% at $4.97 in heavy trading on Monday.

AMC’s preferred stock (NYSE: APE) rose 2.78% to $1.85 in thin activity.

Distressed returns lower

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns finished Friday at minus 0.06%, down from 0.12% on Thursday, 0.04% on Wednesday and 0.18% in the first two sessions of the prior week.

Month-to-date total returns were 2.45% on Friday, compared to 2.51% on Thursday, 2.39% on Wednesday, 2.34% on Tuesday and 2.16% at the week’s start.

Year-to-date distressed total returns were 14.36% on Friday versus 14.43% on Thursday, 14.29% midweek, 14.24% on Tuesday and 14.04% at the start of the week.

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