DISH paper, CDS spreads weaken; iHeartCommunications softens; Lumen, Level 3 mixed

By Cristal Cody

Tupelo, Miss., March 15 – Securities from EchoStar Corp. subsidiaries DISH DBS Corp. and DISH Network Corp. turned softer this week and on Friday.

Credit default swap spreads were more than 100 basis points wider in both companies for the week.

DISH DBS’ 5 1/8% senior notes due 2029 were about ½ point lower on the day and down about 2 points from a week ago.

Overall market tone remained soft as the latest economic data was absorbed ahead of the Federal Reserve’s March policy meeting in the week ahead.

The New York Federal Reserve Bank reported its March Empire State Manufacturing index fell 19 points to a seasonally adjusted negative 20.9, “far worse” than the expected reading of negative 7.0 and the February reading of negative 2.4, Confluence Investment Management strategists said in a note Friday.

Meanwhile, the Labor Department reported February import prices were up 0.3% from the previous month, “matching expectations and marking a welcome slowdown from the 0.8% increase in January,” Confluence strategists said.

Activity mostly quieted on Friday with volatility little changed.

The CBOE Volatility index edged up 0.07% to 14.41.

The Nasdaq declined 0.96%.

The iShares iBoxx High Yield Corporate Bond ETF fell 5 cents, or 0.06%, to $77.07.

In other distressed trading, iHeartCommunications, Inc. slipped over the week, sources said.

The company’s 8 3/8% senior notes due 2027 (Caa3/CCC-) were quoted down about 1 point, while the CDS spreads widened over 125 bps.

Lumen Technologies, Inc. saw some recovery after the company reported on Monday that it commenced a consent solicitation to amend certain indentures and facilitate the completion of transactions expected under its amended transaction support agreement, sources said.

Lumen’s paper was up nearly 5 points on a “rebound in some distressed telecoms this week,” according to a BofA Securities note on Friday.

The company’s CDS spreads also tightened more than 40 bps this week.

DISH paper lower

DISH’s paper went out lower on Friday in mostly light trading after turning softer on Thursday, a source said.

The 7¾% notes due 2026 (Caa3/CC) traded as high as 67 bid early in the session, down ¼ point from Thursday, before softening to 65 bid by late afternoon on over $5 million of volume.

DISH DBS’ 5 1/8% senior notes due 2029 were about ½ point lower at around 43 bid and down about 2 points from a week ago.

DISH DBS’ 7 3/8% senior notes due 2028 traded at 49½ bid in light activity on Friday, down about 1½ points from the same session a week ago.

CDS spreads in the name also weakened.

DISH DBS’ CDS spreads widened 138 bps for the week ended Wednesday to 2,712 bps, according to a Moody’s Ratings report.

DISH Network’s CDS spreads eased 112 bps to 2,205 bps over the same period.

The bonds have been volatile this year since EchoStar closed on its acquisition of DISH in December and after independent auditor KPMG LLP announced doubt about the company’s ability to continue as a going concern in February.

All three bonds were part of a distressed debt exchange offer that was terminated in January.

EchoStar reported heavy fiscal 2023 losses in February following the failed DISH bond exchange offers for four tranches of notes in January and two tranches of convertible bonds in February.

EchoStar chief executive officer Hamid Akhavan reported in February the company is in discussions with certain investors as it expects to come up short when $1.98 billion of debt matures in November. The company said it will meet its obligations due in March. The company has $951 million of debt due this month and also has a $3.59 billion payment due April 1 to T- Mobile US Inc. for its 800 MHz spectrum licenses.

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

iHeart declines

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa3/CCC-) slipped about 1 point to head out at 55½ bid in light activity on Friday, a market source said.

The bonds have declined over 5 points since the start of the month.

iHeartCommunications’ CDS spreads also were weaker.

The issuer’s CDS spreads widened 127 bps for the week ended Wednesday to 2,492 bps, Moody’s said.

Parent iHeartMedia, Inc. was downgraded by S&P Global Ratings after the San Antonio-based radio company reported weaker revenue and operating income in February.

Level 3 declines

Lumen’s 5 3/8% senior notes due 2029 (Ca/CCC-) were last seen trading at 33½ bid, up 2 points on the week, a source said.

The company’s CDS spreads also tightened 42 bps in the week ended Wednesday to 2,578 bps, Moody’s said.

Meanwhile, paper from subsidiary Level’s 3 was flat to weaker going into the weekend. The 4 5/8% senior notes due 2027 (Caa2/CC) were unchanged on the week at 67 bid.

Level’s 3’s 4¼% senior notes due 2028 (Caa2/CC) were down about 5 points on the week on a 46 bid handle.

Lumen’s and Level 3’s bonds have been pressured since Lumen reported in January an amended transaction support agreement reached with a majority group of creditors.

The companies’ bonds were extremely volatile in February and experienced wide drops or gains of nearly 20 points.

Lumen is underway with an amended transaction support agreement reached in January with a majority group of creditors and subsidiaries Level 3 Financing, Inc. and Qwest Corp.

The TSA includes $1.33 billion in new-money long-term senior secured first-lien debt by Level 3, an approximately $1 billion new revolving credit facility at Lumen, the extension of maturities to mostly 2029 and beyond and the repayment of certain of Lumen’s and Qwest’s debt.

The Monroe, La.-based global telecommunications company reported on Monday that it expects to close the TSA transactions by the end of the month.

Distressed index lower

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened to negative 0.47% on Thursday from 0.22% on Wednesday, 0.38% on Tuesday and 0.18% on Monday.

Month-to-date total returns fell to 1.3% in the prior session from 1.78% on Wednesday, 1.55% on Tuesday and 1.17% at the start of the week.

Year-to-date total returns declined to 3.95% on Thursday from 4.44% midweek, 4.21% on Tuesday and 3.82% on Monday.

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