DISH bonds mostly up as investors, business affiliates give support; markets slip

By Cristal Cody

Tupelo, Miss., Jan. 24 – While EchoStar Corp. is facing heat after its debt exchange offers launched last week for four tranches of notes from new subsidiary DISH Network Corp., the company’s bonds are moving higher as the issuer gains support from investors and business affiliates.

DISH’s bonds, including the tranches in the debt exchange offers, were mostly “up a point” on Wednesday, a trader said.

DISH DBS Corp.’s 7¾% notes due 2026 (Caa2/CC) were more than 1 point higher on over $10 million of volume as activity slowed from Tuesday when the issue saw more than $15 million of paper traded.

Most of the secondary action in the name on Wednesday was in the short end of the company’s tranches with the 5 7/8% senior notes due 2024 (Caa2/CCC+) 1 point higher on more than $42 million of supply.

In the prior week, new parent EchoStar announced that DISH DBS Issuer LLC had started exchange offers and consent solicitations to exchange its 5 7/8% senior notes due 2024, 7¾% senior notes due 2026, 7 3/8% senior notes due 2028 and 5 1/8 senior notes due 2029 for up to $3 billion of new secured notes.

The news was immediately met with frowns from the ratings agencies with both Moody’s Investors Service and S&P Global Ratings reporting they consider the offers distressed exchanges.

S&P downgraded the issuer and bonds based on the offers that will give investors less value than originally promised.

BofA Securities’ junk credit strategist Oleg Melentyev said in a note on Friday that DISH has been on the bank’s default candidate list since early December. DISH’s bonds finished last week off 6 points to a cumulative drop of 15 points, he said.

EchoStar closed in December on the acquisition of DISH, with both companies co-founded by now combined company executive chairman Charles Ergen.

DISH has more than $15 billion of debt.

“It’s a big capital structure,” a source said Wednesday.

Meanwhile, creditor groups have started going after DISH due to the exchange offers and the issuer’s plans announced earlier in the month to transfer collateral.

On Tuesday, Buxton Helmsley Group, Inc., a New York City-based investment fund manager with financial interests in EchoStar, announced it issued a letter to EchoStar directors over “apparent accounting and securities fraud,” among other allegations.

The firm said EchoStar breached its fiduciary duty regarding the DISH merger.

A representative for Buxton Helmsley did not return a call for additional comment by press time Wednesday.

A creditor group reported by Bloomberg to be working with law firm and DISH debtholder Milbank sent a letter Friday noting that DISH’s plan to swap nearly $10 billion of debt for new secured notes violates debtholder agreements, and the plan to transfer collateral could be considered fraudulent.

The scrutiny DISH is facing over the bond exchanges and ratings downgrades is not causing much concern for Mission Broadcasting, Inc. president Dennis Thatcher, who was celebrating the company’s 27 television stations in 25 markets across the country coming back online with DISH systems this week.

The Wichita Falls, Tex.-based television broadcaster and DISH Network announced Tuesday they reached a comprehensive, multi-year distribution agreement that covers Mission television stations, which had been restricted from DISH's systems since January 2023.

“The company and the leadership at DISH have managed to survive many, many storms over the years, and we’re betting on them because they’re survivors,” Thatcher told Prospect News on Wednesday. “They’ve fought and very hard to get this far in this business, and I think they’ll come out of it. It’s a good company.”

Mission Broadcasting is still negotiating with DirecTV, which also has been down for a year, Thatcher said.

“It’s a work in progress, a long process, but we’re still optimistic that we’re going to get together and get back on the air,” he said.

Mission's portfolio includes TV stations in Arkansas, Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Missouri, Montana, New Mexico, New York, Pennsylvania, Rhode Island, Texas and Vermont.

DISH higher on week

DISH’s bonds began to sell off in early January after EchoStar announced plans to transfer assets and made exchange offers for $4.9 billion of convertible notes as well as the junk bonds but have since made inroads, sources reported.

DISH’s 5 7/8% senior notes due 2024 (Caa2/CCC+) saw the strongest action on Wednesday on more than $42 million of bonds traded.

The notes were 1 point higher at 93¾ bid.

The issue closed out the prior week about 1 point better at 91 bid, 92 offered.

DISH DBS’ 7 3/8% senior notes due 2028 (Caa2/CC) jumped 1¼ points early in the morning to 45¼ bid, where the issue stuck by the close in light trading totaling over $4 million.

The bonds have improved from trading at 40 bid, 41 offered in the same session a week ago.

The issue went out Tuesday at 44 bid, up around 1¾ points from Monday.

DISH’s 7¾% notes due 2026 (Caa2/CC) were moving more than 1 point higher to around the 59½ bid area on over $10 million of volume as activity slowed from Tuesday when the issue went out at 58 3/8 bid on more than $15 million of paper traded.

The bonds have improved since dropping to 53 bid, 54 offered in the same session last week.

Also Wednesday, DISH’s 5 1/8 senior notes due 2029 (Caa2/CC) added 1¼ points to a quote of 39½ bid. Trading topped $8 million.

The Englewood, Colo.-based satellite cable company’s debt exchange offers expire Feb. 12.

EchoStar’s shares (Nasdaq: SATS) closed Wednesday down 2.58% to $14.72, closer to its 52-week low of $9.53 than its annual high of $24.80.

BWICs active

Market tone was strong over the first half of the session as stock indices climbed but ended mixed as volatility was back. The Nasdaq was 1.06% higher around midday but pulled back by the close to end up 0.36%.

The S&P 500 index rose 0.69% over the morning and closed 0.08% stronger.

“The market when last looked in the morning seemed like it was a little bit better,” a trader said. By the close, the CDX was “down 14 cents, HYG is down 4 cents, junk down almost 5 cents. Basically, almost flat, but I’ve seen a lot of different accounts trading BWICs and others just trying to sell stuff.”

The session saw a “decent number of BWICs in accounts, but not much from the market makers for ETFs,” the source said.

Market volatility was down in the prior session but moved about 5% higher on Wednesday. The CBOE Volatility index rose 4.7% to 13.14.

The iShares iBoxx High Yield Corporate Bond ETF declined 4 cents, or 0.05%, to $77.10.

Distressed index lower

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened to 0.01% on Tuesday from 0.45% on Monday.

Month-, quarter- and year-to-date total returns improved modestly on Tuesday to negative 2.41%.

Returns for the periods were at minus 2.42% at the start of the week.

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