GrafTech downtrend continues; Spirit Airlines, DISH bonds rally in secondary trading

By Abigail W. Adams

Portland, Me., March 6 – It was a relatively quiet and flat day in the distressed debt space on Wednesday with broader markets largely unchanged following Federal Reserve chair Jerome Powell’s congressional testimony.

There were few surprises from Powell’s comments with the narrative unchanged – rate cuts are coming but will not begin until the Fed has more confidence in its victory over inflation.

The comments did little to move the needle in markets, a source said.

With the broader market unchanged, price movements in the space were largely credit specific.

GrafTech Global Enterprises Inc.’s senior notes (B2/BB-) continued their downtrend in active trade on Wednesday despite the continued bull run in the graphite electrode manufacturer’s stock.

Spirit Airlines Inc.’s 8% senior secured notes due 2025 (Caa2) made large gains in active trade as creditors explore options to boost their recovery in a bankruptcy event.

DISH DBS Corp.’s senior notes were also on the rise as parent company EchoStar Corp. continues to pursue financing options to keep the company afloat.

GrafTech declines

GrafTech’s senior notes continued their downtrend on Wednesday despite a strong bull run in the company’s stock.

The 9 7/8% senior notes due 2028 were off about 1 point to return to a 75-handle.

They were seen in the 75 to 75½ context in active trade with the yield about 17¾%, a source said.

The notes returned to their previous trading level after bouncing as high as 80 in late February as GrafTech’s stock formed a strong uptrend.

The 4 5/8% senior notes due 2028 fell as much as 3 points early in the session but pared their losses to close down about 2 points.

The 4 5/8% notes traded down to a 61-handle early in the session but gained strength as the session progressed and were trading in the 62¼ to 62¾ context in the late afternoon.

The yield was 16 3/8%.

There was $10 million in reported volume.

The notes traded up to a 66-handle in late February.

While GrafTech’s notes have given back their gains after rising alongside stock in late February, GrafTech’s stock continued to add to its strong gains over the past month.

Stock closed Wednesday at $1.77, an increase of 2.91%, after rising about 32% since Feb. 23.

GrafTech’s stock saw heavy buying interest after private investor Nilesh Undavia upped his stake in the company and intended to nominate two members to the board as the company engages in a search for a new CEO.

Spirit Airlines rallies

Spirit Airlines’ 8% senior secured notes due 2025 made strong gains on Wednesday as bondholders explore options to up their recovery in the case of bankruptcy.

The 8% notes added 1¼ points to return to a 74-handle.

They stood poised to close the day wrapped around 74¼ with the yield 29 3/8%.

There was $8 million in reported volume.

The notes dipped after Spirit and JetBlue announced on Monday that they had officially terminated their merger agreement.

While lower, there was no firesale in the name with the results largely expected.

Bondholders are now examining ways to up their recovery if the airline does end up in bankruptcy, a source said.

DISH gains

DISH’s senior notes were on the rise on Wednesday as parent company EchoStar continues to explore financing options to keep the company afloat.

The 7¾% senior notes due 2026 added 1 point to close the day wrapped around 69. The yield was about 26 3/8%.

The 7 3/8% senior notes due 2028 added 3/8 point to close the day at 50½. The yield was 27¾%.

Both tranches saw about $6 million in reported volume.

Index

The S&P U.S. High Yield Corporate Distressed Bond index inched up 0.02% on Tuesday with the year-to-date return now 3.11%.

The index was up 0.26% on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.