Spirit Airlines quiets in secondary; Lumen distressed notes lower; AMC paper improves

By Cristal Cody

Tupelo, Miss., Nov. 22 – Tone in the distressed debt market was strong with the junk CDX index and other indices higher amid slower pre-holiday secondary activity on Wednesday.

Spirit Airlines Inc.’s 8% senior secured notes due 2025 (B2) that were volatile in the first two sessions of the week quieted.

“Those have been busy,” a source said. “None of the 8% have traded today.”

The bonds declined 3¼ points to around 72½ bid on Tuesday after climbing over 4 points on Monday.

Overall market tone was up in front of the Thanksgiving Day holiday.

Lumen Technologies, Inc.’s paper has been little traded following the company’s announcement on Monday that it had extended a rights plan that can be used to reduce future tax payments, a source said.

Lumen’s 4% senior secured notes due 2027 (Caa2/B/B-) were down 5/8 point on Wednesday on $1.4 million of volume.

“The last three days, $8.8 million has traded over the whole capital structure,” the source said.

Stock indices were higher following the release of improved economic data.

The Federal Reserve Bank of New York reported on Wednesday that its weekly economic index for the week ended Nov. 23 rose to 2.33% from 1.98% in the prior week due to “rises in retail sales, steel production, consumer confidence, and railroad traffic and a decrease in initial unemployment insurance claims, which more than offset a fall in tax withholding.”

The Nasdaq closed up 0.51%.

The iShares iBoxx High Yield Corporate Bond ETF added 13 cents, or 0.17%, to $75.08.

The CBOE Volatility index declined 3.75% to 12.85.

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were among the most active distressed bonds moving over the afternoon, a source noted.

The issue was up 3/8 point on $5 million of trading.

Lumen softens

Lumen’s 4% senior secured notes due 2027 (Caa2/B/B-) declined slightly on Wednesday to 56¼ bid and a 24.4% yield on $1.4 million of volume, according to a market source.

“They’re down 5/8 point today,” the source said.

Bonds from subsidiary Level 3 Financing, Inc. were not seen active during the session.

Lumen said Monday that its board approved the amendment and restatement of its NOL Rights Plan to extend its expiration date from Dec. 1, 2023 to Dec. 1, 2026.

The plan was approved by Lumen shareholders at its 2021 shareholders annual meeting.

Lumen said it has extended its NOL Rights Plan through Dec. 1, 2026 to protect its federal net operating loss carryforwards of approximately $1 billion as of Dec. 31, 2022 that can be used to reduce its future payments of U.S. federal income taxes.

The company intends to submit the amendment and restatement of the plan for ratification at its 2024 shareholders meeting. If shareholder ratification is not obtained by Dec. 1, 2024, the plan will terminate.

The Denver-based telecommunications company earlier announced it will conduct a debt exchange after reaching an agreement with creditors holding about $7 billion of its debt.

AMC bonds up

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) traded 3/8 point higher on Wednesday at 79 1/8 bid on $5 million of secondary action, a source said.

The issue was among the session’s heaviest traded distressed issues in overall light market supply.

AMC reported earlier in November strong third-quarter revenue results.

The Leawood, Kan.-based movie theater owner’s stock (NYSE: AMC) climbed over 5% on Wednesday to $6.99.

Distressed index declines

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened on Tuesday to minus 0.09%.

Returns were 0.22% on Monday.

Month-to-date total returns fell to 2.23% from 2.32% in the prior session.

Year-to-date distressed total returns dipped to 12.97% on Tuesday from 13.02% on Monday.

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