Altice’s CSC distressed bonds up again; Staples notes climb; distressed volume grows

By Cristal Cody

Tupelo, Miss., Feb. 27 – Bonds from Altice USA, Inc. subsidiary CSC Holdings, LLC stole the show in the junk and distressed secondary markets on Tuesday in heavy volume that totaled around $198 million.

Trading was mostly spread across the company’s higher-rated junk and distressed issues with the paper flat to 3 points better, a source said.

CSC Holdings’ 4 5/8% senior notes due 2030 (Caa2/CCC+) rallied 3 points going out the door on $27 million of volume.

Heavy gains were seen in the name on Monday following news reports that Charter Communications Inc. was considering a takeover of Altice.

Altice started the year under pressure with the company’s liquidity under the gun on a major maturity wall due in 2027, according to a MoffettNathanson LLC note previously released to Prospect News.

Meanwhile, investors took Staples Inc.’s investor announcement of fourth-quarter revenue gains to heart.

The office supplies retailer’s 10¾% senior notes due 2027 (Caa2/CCC) jumped 3¾ points on Tuesday and were nearly 10 points higher from the same session a week ago.

Stocks were mixed on the day.

The S&P 500 index rose 0.17%, while the Dow Jones industrial average dropped ¼%.

The iShares iBoxx High Yield Corporate Bond ETF added a dime, or 0.13%, to end at $77.20.

The CBOE Volatility index fell 2.26% to 13.43.

The benchmark 10-year Treasury note yield rose 1 basis point 4.31%.

“The market is now pricing only 3.3 cuts for 2024 after a string of Fed governors implied that rate cut talk is premature, suggesting a Fed pivot could be a 2H story,” according to a BofA Securities research note on Tuesday. “It's hard to believe that less than a month ago, pre-Jan Fed, consensus was close to 6 rate cuts in 2024.”

The first full Federal Reserve rate cut is now priced for July, BofA said.

Fitch Ratings reported on Tuesday that it added several issuers to its U.S. Market Concern Loan and Bond lists in the last month due to weakening credit metrics or increased risk of a distressed debt exchange, including CommScope Holding Co., Inc.

“Multiple issuers struggled with very tight liquidity and declining operational performance, in many cases due to weakening demand from end customers amid slowing U.S. economic growth,” Fitch said. “Some issuers were further challenged by idiosyncratic events such as product recalls or regulatory roadblocks. We also added several issuers back to our top list following recent completion of DDEs because they did not adequately address near-term maturities or sufficiently improve liquidity.”

The top concern junk bonds list totaled $68.2 billion across 32 issuers as of Feb. 23, up from January volume of $65.5 billion across 35 issuers.

Meanwhile, Fitch’s high-yield trailing 12-month default rate fell to 2.79% by Jan. 31 from 2.94% at the end of 2023.

Fitch has forecast a 2024 junk bond default rate of 5% to 5½%, up from a 2023 default rate of 2.79%.

CSC notes jump

Altice USA subsidiary CSC’s 4 5/8% senior notes due 2030 rallied 3 points going out the door at 55½ bid and a 15.47% yield, a source reported Tuesday.

The tranche was among the issuer’s most active bonds on $27 million of volume.

CSC’s 5¾% senior notes due 2030 (Caa2/CCC+) added 1½ points to head out at 58½ bid and a 17¼% yield on $21.5 million of supply.

The issue was seen Monday more than 8 points better.

The company’s 7½% senior notes due 2028 (Caa2/CCC) traded on Tuesday over 1 point better in the 70 bid range on $24 million of volume by late afternoon.

The bonds were quoted on Monday over 12 points higher.

CSC’s higher-rated junk bonds were the busiest in the name on Tuesday with the 11¾% senior guaranteed notes due 2029 (B2/B-) priced in January flat at 104 bid on more than $57 million of paper traded.

The bonds held on to the prior day’s 4-point gain.

Trading soared in the paper on Monday on news reports that Charter Communications was considering a takeover of Altice.

CSC’s notes were quoted up 4 points to over 12 points on Monday.

Also on Monday, Altice Financing SA privately placed $375 million of new 9 5/8% senior secured notes due 2027.

The New York-based broadband communications company’s stock closed up 18.9% at $2.96 in heavy trading that totaled more than four times the average volume.

Staples moves up

Staples’ 10¾% senior notes due 2027 added 3¾ points to hit 88 bid over the afternoon Tuesday, a source said.

The issue was among the day’s most active distressed notes with a yield of 15.7% and volume totaling $10.8 million.

Staples’ paper has climbed over the past week from where the issue was quoted at 78½ bid and a 20.3% yield in the same session last week.

The company reported to investors and analysts that fourth-quarter revenue increased 3.7%, a source said.

Staples’ EBITDA climbed 19% year over year.

The Framingham, Mass.-based office products retail company is owned by private equity firm Sycamore Partners.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns slipped to 0.2% on Monday from 1.07% on Friday.

Month-to-date total returns rose to 2.81% at the week’s start from 2.61% ahead of the weekend.

Year-to-date total returns also improved to 0.6% on Monday from 0.41% on Friday.

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