Distressed debt credits quiet pre-CPI; CommScope improves; Office Properties active

By Abigail W. Adams

Portland, Me., March 11 – The distressed debt space opened the week as it closed the last – quietly.

Trading activity was muted with few notable price movements as market players await the Tuesday release of the Consumer Price Index report.

The report has the potential to be a high vol. event for markets with last month’s report sparking heavy selling in the space.

While the macro data released since then has been encouraging, any surprise uptick in inflation will not be good for the market, which has now widely priced in June rate cuts, a source said.

With the market largely focused on the pending inflationary data, there was little impetus for movement during Monday’s session.

CommScope Holding Co., Inc.’s senior notes were among the more actively traded credits in the space with the notes improved across the board.

Office Properties Income Trust’s senior notes (Caa1/CCC) were active during Monday’s session although with little movement in price.

CommScope improves

CommScope’s senior notes improved across the board on Monday after following different trajectories following its early March earnings report.

CommScope’s notes added ½ to 2½ points with its shorter-duration issues posting the largest gains.

The 6% senior secured notes due 2026 (B2/CCC+) jumped 2½ points in active trade.

They closed the day at 94¾ with the yield about 9%, a source said.

CommScope’s 6% senior notes due 2025 (Caa2/CCC-) added another 1 point to trade on an 87-handle.

They closed the day at 87¾ with the yield 17¼%.

The 7 1/8% senior notes due 2028 added ¼ point to trade at 37¾ with the yield now 37 1/8%.

Each tranche saw about $5 million in reported volume.

While CommScope came out with a large earnings miss and a warning that revenue was to take a hit in the first quarter in early March, the network infrastructure provider’s senior notes moved in opposite directions.

CommScope’s 2025 notes made solid gains the previous week while its longer-duration notes fell.

The market had increased confidence in the company’s ability to pay off its shorter-duration notes as opposed to the longer-dated end of the curve.

However, news of insider buying of stock may have piqued some interest in the broader capital structure, a source said.

Office Properties active

Office Properties’ senior notes were active on Monday although with little movement in price.

The 4½% senior notes due 2025 were the most active in the debt stack with the notes trading in the 83½ to 84½ context, a source said.

The notes stood poised to close the day at 83¾ with the yield about 26¼%.

There was $6 million in reported volume.

The 3.45% senior notes due 2031 were also unchanged in the 41 to 42 context with the notes closing the day wrapped around 41½.

The yield was 17¾%.

There was $3 million in reported volume.

The office building REIT is from a highly suspect sector with commercial properties one of the areas where market players expect trouble, a source said.

Indexes

The S&P U.S. High Yield Corporate Distressed Bond index was flat on Friday with the year-to-date return remaining 3.63%.

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