AMC notes improve; Michaels attracts secondary support; iHeartCommunications paper rises

By Cristal Cody

Tupelo, Miss., Dec. 12 – AMC Entertainment Holdings, Inc.’s bonds saw some gains in active secondary action on Tuesday after the company earlier announced it completed a $350 million at-the-market equity offering and repurchased $50 million principal amount of its 10% second-lien notes due 2026.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were one of the top moving distressed and junk bonds over the session on nearly $21 million of volume, a source said. The issue was about 2 points better on the week.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) were under ¼ point better on $5 million of volume.

In other distressed trading, Michaels Cos, Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC-) picked up 1¼ points in active supply that topped $13 million over the session.

iHeartCommunications, Inc.’s bonds also gained after coming under pressure in the prior two sessions on a ratings downgrade following reports Tuesday that Liberty Media Corp. and Sirius XM Holdings Inc. will merge to create a new public media firm.

iHeart’s 6 3/8% senior secured notes due 2026 (Caa1/B+) rallied 1 1/8 points, while its common stock dropped almost 10% on the day.

Overall tone stayed strong with stock indices mostly stronger and measured market volatility down nearly 5%.

The Nasdaq closed up 0.7%.

The iShares iBoxx High Yield Corporate Bond ETF rose 17 cents, or 0.22%, to $75.98.

The CBOE Volatility index declined 4.43% to 12.07.

Meanwhile, November defaults moved higher and are tracking materially above the five- and 10-year averages.

Defaults rose by 14 to 141 as of Nov. 30, according to a S&P Global Ratings notice on Tuesday.

The U.S. space had the most defaults by region with 64% of November defaults total and with defaults becoming more widespread across sectors, S&P said.

Distressed exchanges were the most common reason for defaults, making up over 70% of November defaults.

AMC little changed

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were the most active tranche in the company’s debt seen moving in distressed and junk trading on Tuesday, according to market sources.

The issue went out at 83 bid and yielding 18.83% on $20.92 million of volume, a source said.

The notes traded around 83 bid to as high as 83½ bid over the session.

The issue was not active on Monday and was last seen on Friday around the 81 bid area.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) were under ¼ point better at 67¾ bid on $5 million of volume.

On Monday, AMC announced that it repurchased $50 million principal amount of its 10% second-lien notes due 2026 at an average discount of 19.67% plus accrued interest and exchanged $12.28 million principal amount of its 10%/12% cash/PIK toggle second-lien subordinated notes due 2026 plus accrued interest for approximately 1.6 million shares of class A common stock with an implied value of $8.19 per share.

AMC reported that so far in 2023, it has raised $865 million of gross equity capital and lowered liabilities by around $440 million by reducing its corporate borrowings by about $350 million.

The Leawood, Kan.-based movie theater owner’s stock (NYSE: AMC) closed down 5.49% to $6.72.

Michaels perks up

In the distressed retail space, Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) were 1¼ points higher at 62 bid on $13 million of trading, a source reported.

The bonds were yielding 19.61%.

The issue has improved about 5 points from a week ago but remains down from the 66 bid range in September.

S&P Global Ratings downgraded the company and notes in October.

The Irving, Tex.-based arts and crafts retailer was taken private in 2021 by funds managed by Apollo Global Management, Inc. affiliates.

iHeartMedia up

iHeart’s 6 3/8% senior secured notes due 2026 (Caa1/B+) rallied 1 1/8 points on Tuesday to a quote of 80¾ bid on $7 million of secondary supply, a source said.

The issue on Monday was 1/8 point weaker after sliding on Friday by 3¾ points to 79¾ bid.

iHeartCommunications’ 5¼% senior notes due 2027 (Caa1/B+) were more than 1/8 point better at around 73 bid on $4.5 million of activity on Tuesday.

In the prior week, Moody’s Investors Service downgraded iHeartCommunications based on increasing refinancing risks and elevated financial leverage from a decline in radio advertising demand.

The subsidiary of San Antonio-based parent media broadcasting company iHeartMedia, Inc. has around $3.1 billion of debt maturities due in 2026 and $1.7 billion due in 2027.

iHeartMedia’s shares (Nasdaq: IHRT) closed down 9.2% to $2.38 on Tuesday.

Distressed index edges lower

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns opened the week at 0.14%, down from 0.15% on Friday and 0.43% in the same session a week ago.

Month-to-date total returns rose on Monday to 2.04% from 1.89% ahead of the weekend and from 0.54% in the week-ago session.

Year-to-date distressed total returns improved in the prior session to 17.37%, compared to 17.21% on Friday and 15.65% the same day a week earlier.

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