iHeartCommunciations slides after downgrade; CommScope mixed; Community Health quiet

By Cristal Cody

Tupelo, Miss., Dec. 8 – iHeartCommunications, Inc.’s bonds declined across the board on Friday following a downgrade from Moody’s Investors Service.

The 8 3/8% senior notes due 2027 (Caa1/CCC+) were tracking down over 2½ points to 3 points in volatile trading by the close.

iHeart’s 6 3/8% senior secured notes due 2026 (Caa1/B+) slid 3¾ points to 4 points.

The issuer’s credit default swap spreads widened over 200 basis points this week in the widest U.S. corporate spread increases seen.

Meanwhile Friday, CommScope Holding Co., Inc.’s paper remained thinly traded as investors absorbed news reports that the company had hired Moelis & Co. for restructuring advice.

The 6% senior notes due 2025 (Caa2/CCC-) fell ¾ point.

Stock indices finished higher after the November U.S. jobs report came in better than expected.

The S&P 500 index was up 0.41%, while the iShares iBoxx High Yield Corporate Bond ETF was weaker by 15 cents, or 0.2%, at $75.86.

The CBOE Volatility index retreated 5.44% to 12.35 by the close.

The Labor Department reported on Friday that total U.S. nonfarm payroll employment increased by a seasonally adjusted 199,000 in November, while the unemployment rate fell to 3.7%.

The data beat market expectations for an increase of 185,000 jobs for the month and beat forecasts the unemployment rate would be unchanged from the 3.9% level posted in October.

The stock and bond markets are gearing up for the Federal Reserve’s last monetary policy rate meeting next week with predictions mostly calling for no Federal Funds rate increase, sources said.

“The data will help set the tone for next week’s Federal Reserve meeting, with growing hope that the U.S. is ready to keep the pause button pressed on interest rate increases,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said in a note on Friday. “A slowing jobs market would help cement this enthusiasm.”

So far, no corporate bond defaults have been reported in December, according to a note on Friday from BofA Securities analysts.

The year-to-date default total stands at $33 billion in bonds and $41 billion in loans, according to the report.

Elsewhere in the secondary market, Community Health Systems Inc.’s paper saw thin trading on Friday following a downgrade from Fitch Ratings.

Community Health’s 5¼% senior secured notes due 2030 (B3/B-) traded around 1¼ points higher during the session.

iHeart notes drop

iHeart’s paper was volatile headed into the close, according to a market source.

IHeart 6 3/8% senior secured notes due 2026 (Caa1/B+) slid 4 points to 79½ bid on $11.55 million of secondary action headed into the close.

The yield was 17.2%.

By the close, the issue had given back 3¾ points to a quote of 79¾ bid and a 17.05% yield on $13.35 million of volume.

The 8 3/8% senior notes due 2027 (Caa3/CCC+) fell over 2½ points to a print of 61.90 on $10.7 million of trading. The yield was 25.93%.

By the close, the notes were down 3 points at 61 bid and yielding 26.51% on $11.7 million of trading.

Both tranches were among the top junk bonds traded on Friday, according to the market source.

iHeart’s 4¾% senior secured notes due 2028 (Caa1/B+) also traded off 2¼ points to 71¾ bid and a yield of 14.05% on about $13 million of volume on Friday.

iHeart’s 5¼% senior secured notes due 2027 (Caa1/B+) were quoted heading out at 73 bid on nearly $9 million of trading.

Meanwhile, iHeartCommunications’ CDS spreads widened 219 bps over the past week ended Wednesday to 1,806 bps, according to a Moody’s report.

Moody’s said Thursday it downgraded iHeartCommunciations based on increasing refinancing risks and elevated financial leverage from a decline in radio advertising demand. The company has around $3.1 billion of debt maturities due in 2026 and $1.7 billion due in 2027, Moody’s noted.

San Antonio-based parent media broadcasting company iHeartMedia, Inc.’s shares (Nasdaq: IHRT) closed down 5.36% to $2.65 on Friday.

CommScope mostly quiet

CommScope, Inc.’s 4¾% senior secured notes due 2029 (B2/CCC+) went out Friday little changed at 63¾ bid on more than $5 million of trading, according to market source.

The issue was about ¼ point better on the week.

The 7 1/8% senior notes due 2028 (Caa2/CCC-) were last seen active in the secondary market on Thursday ¼ point better at 47¾ bid.

CommScope Technologies LLC’s 6% senior notes due 2025 (Caa2/CCC-) were trading about 1/8 point higher on Friday at around 78 bid on light supply of more than $2 million.

The Hickory, N.C.-based network infrastructure manufacturer was reported Friday to have hired Moelis for restructuring advice.

Shares (Nasdaq: COMM) were little changed on the day and went out up 0.55% at $1.84.

Community Health eyed

Community Health’s 5¼% senior secured notes due 2030 (B3/B-/B+) traded around 1¼ points higher on Friday at the 79½ bid range, but activity was extremely thin, a source said.

Fitch Ratings said Friday the downgrade reflects the issuer’s reduced EBITDA and reduced forecasted debt reduction for 2024 through 2026.

Shares (Nasdaq: CYH) in the Franklin, Tenn.-based operator of acute care and outpatient facilities traded 3.11% better on Friday at $2.65.

Distressed index softens

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined on Thursday to 0.17% versus 0.3% on Wednesday, 0.72% on Tuesday and 0.43% on Monday.

Month-to-date total returns increased on Thursday to 1.73% from 1.56% on Wednesday, 1.26% on Tuesday and 0.54% at the week’s start.

Year-to-date distressed total returns rose to 17.02% in the prior session from 16.82% midweek, 16.48% on Tuesday and 15.65% on Monday.

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