DISH Network notes decline, EchoStar paper gains on corporate asset reshuffle

By Abigail W. Adams

Portland, Me., Jan. 10 – It was a firm day in the distressed debt space on Wednesday as markets awaited the Thursday release of the Consumer Price Index report and the launch of earnings season.

While the market is widely anticipating rate cuts in 2024, when they begin remains a matter of debate, sources say.

Whether CCC credits will be able to access capital markets on reasonable terms to refinance looming maturities has enormous ramifications for the credit tier, with a lower default rate set to spark their outperformance.

However, investors have been wary of distressed names in the early days of 2024 with defaults expected to rise.

While the broader market was firm on Wednesday, it was topical news that sparked the heaviest volume and largest price movements in the space.

And that movement was to the downside.

DISH Network Corp.’s senior notes issued by DISH DBS Corp. tanked in heavy volume after the company announced an asset shuffle that placed the company’s unencumbered wireless spectrum licenses outside of the reach of creditors.

The notes sank 5 to 8 points on the news.

However, the asset reshuffle was a positive for EchoStar Corp.’s 6 5/8% senior notes due 2026 (B2/CCC+), which rose in heavy volume following the announcement.

DISH tanks

DISH was the name of the day on Wednesday with its senior notes issued by DISH DBS tanking after the company announced an asset reshuffle.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) were off as much as 10 points to trade as low as 60 early in the session, a source said.

They pared some losses as the session progressed to close the day on a 63-handle with the notes trading in the 63½ to 63¾ context.

The yield was about 29½%.

With $75 million in reported volume, the notes were the most actively traded in the secondary space.

DISH’s 5¼% senior secured notes due 2026 (B2/B) traded as low as a 78-handle early in the session.

However, they also pared their losses to close the day down about 5 points with the notes trading in the 80½ to 81½ context heading into the market close.

There was $42 million in reported volume.

DISH’s 5 1/8% senior notes due 2029 closed down 7 points at 43 5/8.

The yield rose to about 24½%.

There was $36 million in reported volume.

DISH’s 7 3/8% senior notes due 2028 tumbled 8 points to close at 50 with the yield 27½%.

There was $22 million in reported volume.

DISH sank after the company announced that it was transferring encumbered wireless spectrum licenses to the newly formed subsidiary EchoStar Wireless Holding LLC.

DISH’s asset reshuffle also involved moving an intercompany loan from DISH DBS to a newly formed subsidiary.

The moves “pulled the rug out from one area of the capital structure,” a source said.

It transferred assets out of the reach of creditors in the heavily indebted company.

EchoStar gains

While DISH’s senior notes tanked on the asset reshuffle, EchoStar’s 6 5/8% senior notes due 2026 (B2/CCC+) logged strong gains.

The notes gained 2 points with the transfer of assets a boon to EchoStar’s part of the capital structure.

The 6 5/8% notes were trading in the 74½ to 75½ context heading into the market close.

There was $19 million in reported volume.

Indexes

The S&P High Yield Corporate Distressed index added 0.49% on Tuesday with the year-to-date return negative 0.96%.

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