Altice mixed following second downgrade; AMC notes improve, stock drops on equity sale

By Cristal Cody

Tupelo, Miss., March 28 – Altice France Holding Restricted Group’s paper stayed volatile over the short session on Thursday following another ratings downgrade.

Altice France Holding SA’s 10½% senior notes due 2027 (Caa2/CCC-) improved less than 1/8 point on the day but remained more than 30 points lower from last week.

S&P Global Ratings announced it downgraded the company and the bonds on an increased risk of a distressed exchange. Moody’s Ratings also lowered the ratings on the company and the notes on Wednesday.

Altice France SA and affiliate Altice USA, Inc. are listed among the 10 largest junk bond and loan issuers with amounts outstanding of $16.21 billion and $22.72 billion, respectively, according to a JPMorgan Securities LLC note released Thursday to Prospect News.

Distressed exchanges have jacked the default rate higher across both bonds and loans this year.

The par-weighted high-yield default rate is 1.66%, or 2.53% including distressed exchanges, JPMorgan said.

For loans, the par-weighted default rate is 1.77%, or 3.17% including distressed exchanges.

Global corporate defaults nearly doubled to 153 in 2023 from 85 in 2022, according to a S&P study released Thursday.

The consumer/services sector led the global default tally for a third straight year, accounting for 25% of defaults.

Market tone was mixed on the last day of the first quarter.

The S&P 500 index was up 0.11%, while the Nasdaq closed down 0.12%.

The iShares iBoxx High Yield Corporate Bond ETF fell 17 cents, or 0.22%, to $77.73.

The CBOE Volatility index increased 1.8% to 13.01.

The landscape has been challenging for capital markets over the past five quarters, according to the JPMorgan note.

“The number of bond-only, bond-and-loan, and loan-only issuers has changed since the beginning of 2023,” JPMorgan said.

Fewer issuers are in the market this year.

The number of junk bond issuers has declined 4%, the number of bond-and-loan issuers is down 1%, and the number of loan-only issuers has dropped 11%, according to the report.

The number of leveraged credit issuers also has declined 7%.

Meanwhile, AMC Entertainment Holdings, Inc.’s notes climbed on Thursday, while its stock sank after the company announced it was selling up to $250 million more of its class A common stock.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) went out ¾ point better on $15 million of action by the end of the day.

The company’s shares sank over 14%.

In 2023, AMC raised more than $865 million from equity sales, including $350 million just in the fourth quarter.

Altice paper volatile

Altice France Holdings’ 10½% senior notes due 2027 (Ca/CCC-) were volatile in heavy trading totaling nearly $30 million over the short market session, a source said.

The bonds traded from around 35½ bid to 39 bid and went out less than 1/8 point better near the 37¾ bid area.

The bonds traded at 70½ bid, 71½ offered in the prior week before Altice’s securities plunged following weaker earnings results and reports the company has hired financial and legal advisers.

Altice France’s 5 1/8% senior secured notes due 2029 (Caa1/CCC+) remained volatile also over the day in lighter trading totaling $12 million.

The issue was seen in the 67 bid to 70 bid area over the day and went out about 1/8 point lower from Wednesday at 67 7/8 bid.

S&P said on Thursday it downgraded the company and bonds following management’s weaker 2024 guidance and said the “new tone” increased the risk of a distressed exchange on the secured and unsecured debt.

Moody’s said Wednesday it downgraded Altice and its senior unsecured and secured notes, reflecting a material increase in a probability of default.

The telecommunications company is based in Paris.

AMC bonds jump

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) traded ¾ point better at 66¾ bid in supply that topped $15 million, a source said.

The issue was going out near the day’s low after trading as high as 68¼ bid.

On Wednesday, the notes gave back 1½ points on $12 million of volume.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were over 1¾ points better at 77½ bid on $7 million of supply on Thursday.

The issue traded on Wednesday mostly unchanged on $11 million of volume.

AMC said on Thursday that it agreed to sell up to $250 million of class A common shares with proceeds to be used to bolster liquidity; to repay, refinance, redeem or repurchase its existing debt; and for general corporate purposes.

“Among other reasons, the offering is being conducted to enhance the company’s liquidity in light of the low first-quarter box office, resulting in part as previously disclosed from the Writers Guild of America strike and the Screen Actors Guild-American Federation of Television and Radio Artists strike that occurred during 2023, increased seasonal working capital requirements, and the resulting cash burn the company has experienced,” according to the 424B5 filing.

Settlement of the at-the-market offering is expected on May 28.

The Leawood, Kan.-based movie theater company’s stock (NYSE: AMC) plunged as low as $3.65 on Thursday in heavy volume that totaled nearly 44 million shares. The stock closed down 14.29% to $3.72.

Distressed returns widen

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns widened on Wednesday to negative 0.34% from minus 0.04% on Tuesday and negative 0.14% at the start of the week.

Month-to-date total returns softened to minus 0.66% midweek from negative 0.33% on Tuesday and negative 0.29% on Monday.

Year-to-date total returns fell to 1.94% from 2.28% on Tuesday and 2.32% at the week’s start.

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