AMC notes decline; DISH dips; iHeart higher; Lumen, Level 3 down; Wolverine flat

By Cristal Cody

Tupelo, Miss., Aug. 22 – Familiar names in the distressed debt market dominated secondary trading on Tuesday.

AMC Entertainment Holdings, Inc.’s, DISH Network Corp.’s and iHeartCommunications, Inc.’s paper saw heavy trading over the session that put the securities among the most active junk bonds traded.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) dropped 7/8 point on $15.5 million of volume ahead of the company’s plans to wipe out its preferred stock class this week.

The movie theater operator’s stock has plunged about 42% week to date.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) were modestly lower on the day on $14.6 million of trading on Tuesday.

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa1/B-) added 1½ points on $13.66 million of secondary action.

Meanwhile, paper from Lumen Technologies, Inc. and subsidiary Level 3 Financing, Inc. fell more than 1 point in strong trading following a downgrade from Moody’s Investors Service on Tuesday.

Level 3’s 4 5/8% senior notes due 2027 (B1/CCC+) gave back 1½ points on $13.55 million of volume.

Market tone stayed mostly soft during the session under a wave of mixed earnings results from retailers including Dicks Sporting Goods, Inc. and Macy’s Inc.

The S&P 500 index closed off 0.28%.

The iShares iBoxx High Yield Corporate Bond ETF rose 4 cents, or 0.05%, to $74.11.

The CBOE Volatility index declined 0.93% to 16.97.

Elsewhere Tuesday, Wolverine World Wide Inc.’s 4% senior notes due 2029 (B1/B+) traded modestly higher in thin activity after the distressed company was downgraded.

AMC down

AMC’s paper remained under pressure in the secondary market on Tuesday in strong trading supply, a source said.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) dropped 7/8 point to 75¼ bid on $15.5 million of volume.

On Monday, the issue was quoted at 76 1/8 bid on $12.8 million of trading.

The yield was up at 22.29% versus 21.77% on Monday.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also fell ½ point to 69½ bid on $7.94 million of trading on Tuesday.

On Thursday, the company intends to conduct a share increase and reverse stock split to allow the conversion of all of AMC’s outstanding preferred equity units into shares of class A common stock.

The APEs are expected to be delisted from the New York Stock Exchange and cease trading on Friday.

AMC moved to conduct the conversion after the Delaware Court of Chancery earlier this month approved the settlement of a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over the issuance of its preferred stock.

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) slid a second day in extremely heavy trading. Shares closed down 18.27% to $2.55 on over 107 million shares traded.

AMC’s stock dropped 23.72% on Monday on more than 112 million shares traded.

AMC’s preferred stock (NYSE: APE) also closed down 11.32% to $1.88 in heavy volume.

DISH edges lower

DISH DBS Corp.’s 7¾% senior notes due 2026 (Caa2/B-) inched down to just under 74 bid on $14.6 million of trading on Tuesday, a source said.

The yield was 20.2%.

The notes were about ¼ point better from where they went out on Friday at 73¾ bid.

DISH’s bonds have been volatile in strong trading supply this month since its plans to merge with EchoStar became public.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) fell 1.09% to $6.33 in thin activity.

iHeart trades up

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa1/B-) also saw heavy trading over the session, a source said.

The notes were up 1½ points at 68 bid on $13.66 million of trading. The yield was 21.32%.

Shares (Nasdaq: IHRT) in iHeartMedia, Inc., a San Antonio-based media broadcasting company, closed up 2.63% to $3.51 in light trading.

Lumen, Level 3 pressured

Lumen Technologies’ 4% senior secured notes due 2027 (Caa2/B) were quoted at a print of 66.37 on $5 million of volume on Tuesday, a source said.

Paper from subsidiary Level 3 was more active and lower on the day following the ratings downgrade.

Level 3’s 4 5/8% senior notes due 2027 (B3/CCC+) fell 1½ points to 73¾ bid on $13.55 million of trading volume.

The company’s 4¼% senior notes due 2028 (B3/CCC+) dropped over 2¼ points to around 64 bid in lighter volume totaling $2.4 million.

Moody’s said Tuesday it dropped Lumen, Level 3 and Qwest Corp.’s ratings to reflect continued weak operating performance and $1.8 billion of debt due in early 2025 and an additional $9.4 billion of debt coming due in 2027.

The company’s risks are higher for a distressed debt exchange, “especially given Lumen’s weak equity valuation and low debt trading levels,” Moody’s said.

In March, Level 3 conducted an offer to exchange eight series of senior notes for up to $1.1 billion of new 10½% senior secured notes due 2030.

Lumen’s credit default swap spreads widened in July but were seen tighter in the back half of August.

At the start of August, Lumen reported second-quarter losses of $8.74 billion versus a $344 million profit in the same quarter last year.

The Denver-based telecommunications company’s stock (NYSE: LUMN) fell 7.36% in steady trading supply to $1.51 on Tuesday.

Wolverine mostly quiet

Wolverine World Wide’s 4% senior notes due 2029 (B1/B+) traded modestly higher with a 73 bid handle in thin activity, a source said.

S&P Global Ratings downgraded the Hush Puppies manufacturer and its notes on Tuesday and said the issuer’s outlook is negative.

The Rockford, Mich.-based footwear and apparel company announced Aug. 10 that it replaced its chief executive officer.

Distressed index soft

The S&P U.S. High Yield Corporate Distressed Bond index started the week off with one-day total returns of minus 0.09% on Monday.

Returns improved from minus 0.34% on Friday but were down from 0.41% in the same session last week.

Month-to-date total returns softened to 1.14% on Monday from 1.22% on Friday and 2.04% in the week-ago session.

Year-to-date distressed total returns declined to 16.24% at the start of the week from 16.34% on Friday and 17.28% the same day a week earlier.

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