Lumen, Level 3 gain; AMC Entertainment flat to better; iHeart paper, CDS spreads improve

By Cristal Cody

Tupelo, Miss., Sept. 8 – Bonds from Lumen Technologies, Inc. and subsidiary Level 3 Financing, Inc. mostly improved on Friday as some of the most active distressed names moving in an otherwise fairly quiet day.

Level 3’s 4 5/8% senior notes due 2027 (B3/CCC+) added more than 1¼ points on $12 million of trading.

Lumen Technologies’ 4% senior secured notes due 2027 (Caa2/B) were steady on $7 million of supply on Friday.

AMC Entertainment Holdings, Inc.’s notes overall traded mixed on $12 million of activity during the session.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were over ½ point better in much lighter supply totaling $6 million on Friday after the notes declined about 3 points in the previous two sessions on $42 million of secondary action.

Indices squeaked out gains on Friday after treading softer on Thursday.

The S&P 500 index closed up 0.14%.

The iShares iBoxx High Yield Corporate Bond ETF pulled back 3 cents, or 0.04%, to $74.62.

Volatility was lower on the day. The CBOE Volatility index retreated 3.89% to 13.84.

iHeartCommunications, Inc. saw improvement this week and Friday in its credit default swap spreads and bonds.

The company’s 8 3/8% senior notes due 2027 (Caa1/CCC+) improved ¼ point over the session.

Level 3, Lumen active

Level 3’s 4 5/8% senior notes due 2027 (B3/CCC+) hit 77 bid on Friday after picking up more than 1¼ points during the session, a source said.

The notes saw $12 million of trading.

Level 3’s 3¾% senior notes due 2029 (B3/CCC+) added 1½ points to a quote of 60 bid on $7 million of volume.

Level 3’s 4¼% senior notes due 2028 (B3/CCC+/B) also were active on Friday and trading on a 65 bid handle on $8 million of activity.

Parent Lumen Technologies’ 4% senior secured notes due 2027 (Caa2/B) were mostly flat around 66 bid on $7 million of supply on Friday.

Meanwhile, Lumen’s CDS spreads widened 164 basis points in the past week ended Wednesday to 4,328 bps, according to a Moody’s Investors Service note.

Lumen and its subsidiaries were downgraded in August by Moody’s and Fitch Ratings based on a heavy debt load due in 2025 and 2027 and the company’s disclosure of a bondholder group formed to discuss refinancing options and covenant compliance for the proceeds from the sale of its Latin American business.

In August, Lumen reported heavy 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) was unchanged on the day at $1.42.

AMC mixed

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) traded over ½ point better on Friday at 67 5/8 bid, a source said.

While the issue saw only $6 million of volume, that was enough to put it among the day’s most active distressed issues.

The notes on Thursday gave back nearly 1 point on $23 million of trading and declined 2 points on Wednesday on $19 million of secondary action.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) traded little changed with a 67 bid handle on Friday on $6 million of activity.

The notes had declined about 1 point total in the prior two sessions on $10 million of volume.

AMC’s equity and bonds have been volatile since the company converted its preferred equity into class A common stock in August.

Shares plunged 37% on Wednesday after AMC filed a prospectus supplement to sell up to 40 million shares of class A common stock and dropped 5.8% on Thursday.

The Leawood, Kan.-based movie theater owner’s stock (NYSE: AMC) finished Friday down 11.58% at $7.18.

iHeart stronger

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa1/CCC+) rose ¼ point on Friday to 70¾ bid, a source said.

Secondary action was light with $3 million of notes traded.

The issue has improved about 1¼ points since August.

iHeart’s CDS spreads also tightened 17 bps this week to 1,502 bps for the week ended Wednesday, according to a Moody’s report.

San Antonio-based media broadcasting company iHeartMedia, Inc.’s shares (Nasdaq: IHRT) declined 5.4% to $3.32 on Friday in thin trading.

Distressed returns up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns on Thursday were 0.1%, up from minus 0.05% and flat from 0.1% on Tuesday.

Month-to-date total returns rose to 0.22% on Thursday from 0.12% midweek and 0.17% at the start of the short holiday week.

Year-to-date distressed total returns improved to 17.38% from 17.26% on Wednesday and 17.32% on Tuesday.

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