DISH down in more subdued sell-off; Diamond Sports bonds up; Rite Aid gains in January

By Cristal Cody

Tupelo, Miss., Jan. 17 – DISH Network Corp.’s paper continued to see strong but more subdued trading on Wednesday as investors continued to dump the distressed notes.

DISH’s notes traded about 2 points to over 3 points lower after Moody’s Investors Service announced it will consider the company’s new debt exchanges as distressed.

DISH DBS Corp.’s 5¼% senior secured notes due 2026 (B2/B-) have given back more than 6 points this week.

Diamond Sports Group, LLC’s 5 3/8% senior secured notes due 2026 climbed higher on Wednesday as trading jumped to more than $40 million after the bankrupt sports broadcaster reached a restructuring support agreement with its parent company and creditors.

The issue traded up more than 1 point by the close.

In the broader markets, stocks remained under pressure a second day on Wednesday with volatility also higher.

The iShares iBoxx High Yield Corporate Bond ETF fell 33 cents, or 0.43%, to $76.88.

In other bankrupt paper moving in the distressed market on Wednesday, Rite Aid Corp.’s 8% senior secured notes due 2026 softened over 1 point after a fresh batch of stores and leases were announced for sale, though the issue was trading more than 5 points better so far in 2024.

DISH sell-off continues

DISH DBS’ 7¾% senior notes due 2026 (Caa2/CC) were last seen on Wednesday at 54 bid on more than $21 million of paper traded, a source said.

Secondary action was stronger early in the session with more odd lots seen over the afternoon, the source said.

Trading was more subdued from Tuesday when the notes went out over 2½ points lower at 56¼ bid on $53.9 million of paper changing hands.

DISH DBS’ 5¼% senior secured notes due 2026 (B2/B-) traded late Wednesday over 3 points lower at 72¾ bid, down from where the issue last moved on Tuesday at 76¼ bid. Secondary supply totaled more than $18 million by the close.

On Tuesday, the issue fell 3 1/8 points on $17.3 million of volume.

The sell-off in DISH’s bonds began heavily last week after the Englewood, Colo.-based satellite cable company’s announcement that it would move its unencumbered wireless spectrum licenses to the newly formed subsidiary EchoStar Wireless Holding LLC and offered to exchange its convertible notes below par.

On Tuesday, parent EchoStar Corp. announced that DISH DBS Issuer LLC had started exchange offers and consent solicitations for four tranches of senior notes trading at distressed levels at considerations below par.

S&P Global Ratings said Tuesday it considers the exchanges as equivalent to a default, while Moody’s reported Wednesday it considers the exchanges distressed.

The exchange offers expire Feb. 12.

Diamond Sports higher

Diamond Sports’ 5 3/8% senior secured notes due 2026 were busy in the secondary market on Wednesday after the restructuring support agreement announcement, a source said.

The notes saw over $42 million of paper traded.

The bonds opened the session at 5¾ bid, up more than 1 point from where the issue last traded in the prior week at the 4½ bid range.

The issue climbed to as high as over 6 bid and traded as low as 5½ bid over the day.

Secondary action in the issue had picked up in December with the notes rallying in the week ahead of Christmas to 5 bid, 7 offered from 1½ bid, 2½ offered after news reports circulated that Amazon.com was considering a deal with the company to offer their sports coverage.

On Wednesday, Diamond Sports announced that it entered into a restructuring support agreement with over 85% of first-lien debtholders, over 50% of second-lien debtholders and over 66% of unsecured bondholders.

Diamond Sports Group announced March 14 that it filed for Chapter 11 bankruptcy with plans to eliminate approximately $8 billion of debt and become a stand-alone company from parent Sinclair Broadcast Group, Inc.

In July, Diamond Sports filed a complaint in the U.S. Bankruptcy Court for the Southern District of Texas against Sinclair and others over transactions taken against its interests since the issuer was acquired from Walt Disney Co. in August 2019.

The Chesapeake, Va.-based sports broadcast company said the restructuring agreement includes a commitment from Amazon for a minority investment in Diamond and to enter into a commercial arrangement to provide access to Diamond’s services via Prime Video.

Diamond also announced that it has an agreement in principle with Sinclair Inc. to settle the pending litigation in a structure that includes receiving $495 million in cash from the parent company.

Rite Aid lower

Rite Aid’s 8% senior secured notes due 2026 were going out the door near closing at 75¼ bid in light trading totaling $2 million, ¼ point off the day’s low of 75 bid, a source said.

The bonds were down 1¼ points from where the issue last moved on Friday at 76 bid, but the notes have improved so far in January after ending 2023 with a 70 bid handle.

On Tuesday, Rite Aid’s real estate adviser, A&G Real Estate Partners, announced plans to market for sale an additional tranche of neighborhood pharmacy leases and fee-owned properties, pending approval by the U.S. Bankruptcy Court for the District of New Jersey.

The group said a total of 55 Rite Aid leases with more than 10 years remaining in their terms and 24 fee-owned properties are now available across the country in connection with the chain’s financial restructuring.

The Philadelphia-based drugstore chain has announced the closure of more than 200 stores since its Oct. 15 Chapter 11 bankruptcy filing.

According to a KBRA report in November, Rite Aid’s bankruptcy impacts $1.42 billion in CMBS loans.

Distressed index declines

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined to minus 0.59% on Tuesday in the first session of the short holiday week.

Returns were down from 0.16% on Friday and 0.49% in the same session a week ago.

Month-, quarter- and year-to-date total returns widened to negative 2.79% on Tuesday from minus 2.21% on Friday.

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