DISH soft on week as 5G deadlines loom; Hughes notes higher; iHeartCommunications mixed

By Cristal Cody

Tupelo, Miss., Feb. 15 – DISH DBS Corp.’s paper saw some modest gains on Thursday but remained soft on the week with the bonds volatile since the merger with EchoStar Corp. was approved in December as the company faces failed exchange offers and looming government and debt deadlines.

EchoStar made several moves in January that attracted the ire of creditor groups, including transferring assets from DISH and announcing distressed exchange offers for DISH’s convertible bonds and senior notes that ultimately were terminated due to lack of interest.

Meanwhile, DISH committed to the Federal Communications Commission to construct a nationwide 5G broadband network as part of the approval for the T-Mobile US Inc. and Sprint Corp. merger completed in 2020.

According to a Sept. 29, 2023 letter from the FCC, DISH has six months from the date of the letter to complete testing that it has deployed a 5G network where at least 70% of the U.S. population has access to average download speeds of 35 mbps or greater and submit its results to the FCC.

DISH also has a $3.59 billion payment due April 1 to T-Mobile for its 800 MHz spectrum licenses, according to a regulatory filing. DISH paid T-Mobile a $100 million fee in October to delay the total payment.

“The FCC is keeping us pretty busy these days,” a market source not affiliated with DISH said Thursday.

DISH’s 5 1/8% senior notes due 2029 (Caa2/CC) that had been part of a bond exchange offer terminated in January were ¼ point better on the day but down about ¾ point this week.

EchoStar subsidiary Hughes Satellite Systems Corp.’s 6 5/8% senior notes due 2026 (Caa3/CCC+) continued to perk up on Thursday and traded over ¾ point higher. The issue was about 1/8 point better from the start of the week following losses on Tuesday.

iHeartCommunications, Inc.’s paper saw some improvement in light trading on Thursday after turning weaker along with its CDS spreads this week.

iHeartCommunications’ 4¾% senior secured notes due 2028 (Caa1/B+) traded about ½ point better after shedding over 1 point on Wednesday.

The company’s CDS spreads widened over 100 basis points and were the weakest seen in a U.S. corporate name this week.

Risk-on tone was stronger with stock indices closing higher and Treasury yields lower on Thursday.

The benchmark 10-year Treasury note yield fell 2 bps to 4.24%.

The iShares iBoxx High Yield Corporate Bond ETF rose 27 cents, or 0.35%, to $77.14.

In other distressed news, S&P Global Ratings reported on Thursday it expects junk defaults to decline in the fourth quarter but finish the year higher than in 2023.

The U.S. trailing-12-month speculative-grade corporate default rate is projected to hit 4¾%, or 80 defaults, by December, S&P said.

“This reflects a slight decline from our previous 5% projection through September,” according to the report. “The proportion of 'CCC/C' ratings remains elevated, and we expect these firms to contend with weak cash glow and elevated interest expenses this year.”

Defaults this year are mainly expected from sectors including consumer products, media and entertainment and health care, S&P said.

DISH, Hughes up

DISH DBS’ 5¾% senior secured notes due 2028 (B2/B-) went out ¼ point higher at 69 bid in thin trading on Thursday, a source said.

The 5 1/8% senior notes due 2029 (Caa2/CC) that had been part of a bond exchange offer terminated in January also were ¼ point better at 40¾ bid in thin supply over the session.

The bonds have softened about ¾ point on the week.

Hughes Satellite’s 6 5/8% senior notes due 2026 (Caa3/CCC+) traded over ¾ point better at 66 1/8 bid, up slightly from 66 bid, 67 offered at the start of the week.

EchoStar on Monday announced it terminated its exchange offer for two tranches of convertible bonds after the minimum tender conditions were not met. In January, EchoStar terminated exchange offers and consent solicitations for four tranches of senior notes from DISH.

Englewood, Colo.-based satellite owner EchoStar owns companies that include DISH, HughesNet, Boost Mobile and Sling TV.

iHeart higher on day

iHeartCommunications’ 4¾% senior secured notes due 2028 (Caa1/B+) traded about ½ point better at around the 69¾ bid area, but supply was thin on Thursday, a source said.

Wednesday saw the issue bouncing over 1 point lower amid pressure in the company’s notes.

The company’s bonds fell about ¾ point to nearly 2 points in the prior session.

iHeartCommunications’ CDS spreads showed pressure, too. The company’s CDS spreads widened 110 bps over the past week ended Wednesday to 2,154 bps, according to a Moody’s Investors Service report.

The spreads were the widest reported in a U.S. corporate issuer for the week.

The issuer is a subsidiary of San Antonio-based media broadcasting company iHeartMedia, Inc.

Distressed index improves

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns totaled 0.02% on Wednesday, up from negative 0.94% on Tuesday but down from 0.37% on Monday.

Month-to-date total returns were 0.52% in the prior session, compared to 0.5% on Tuesday and 1.45% at the start of the week.

Year-to-date total return losses ended Wednesday at minus 1.65% versus negative 1.66% on Tuesday and minus 0.73% on Monday.

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