Hughes Satellite improves; DISH mostly declines; AMC paper softens; Altice trades lower

By Cristal Cody

Tupelo, Miss., April 3 – Bonds from EchoStar Corp. subsidiaries Hughes Network Systems, LLC and DISH DBS Corp. picked up renewed interest on news the company rolled out a new satellite service.

Hughes Satellite Systems Corp.’s 6 5/8% senior notes due 2026 (Caa3/CCC-) climbed over 1¼ points Wednesday and were trading about ½ point better on the week.

DISH paper mostly declined over the day.

The 5¼% notes due 2026 (Caa1/CCC) fell ½ point.

Altice France Holding Restricted Group’s notes were mostly lower Wednesday in lighter secondary action.

Altice France Holding SA’s 10½% senior notes due 2027 (Ca/CCC-) traded down ¾ point after gaining over 2 points Tuesday.

The company’s bonds have dropped around 30 points or more since Altice France in March lowered its guidance and highlighted potential haircuts for debt holders in order to reduce its leverage.

The slide in Altice’s bonds is expected to have a wide impact, including on CLOs, according to a BofA Securities research note released Wednesday.

“The risk of ratings downgrade was primarily in Altice France although term loans of Altice International and Cablevision did sell off due to increased risks of debt haircuts as Patrick Drahi has a stake in all the entities,” BofA said. “We currently don't expect CCC downgrades for Altice International and Cablevision in our base case.”

Altice France accounts for 1.2% in E.U. and 0.5% in U.S. CLOs, according to the report.

“CLO manager exits out of higher priced CCC into HY bonds and other lower priced B- loans is likely to continue as they seek to contain the impact of further downgrades/defaults,” BofA said.

Overall market tone was mostly stronger Wednesday following strong job data and comments from Federal Reserve chair Jerome H. Powell.

The S&P 500 index rose 0.11%.

The iShares iBoxx High Yield Corporate Bond ETF added 6 cents, or 0.08%, to $76.95.

The CBOE Volatility Index retreated 1.92% over the session to $14.33.

Private sector employment rose by 184,000 jobs in March, according to payroll data processor ADP on Wednesday.

The Labor Department will release the March non-farm payroll report on Friday.

Powell said in opening remarks on the economic outlook at the Stanford Graduate School of Business on Wednesday that tightening the monetary policy rate is anticipated this year.

“Over the past year, inflation has come down significantly but is still running above the Federal Open Market Committee's 2 percent goal,” he said.

In February, headline inflation was 2½% over the past 12 months, while a year earlier it was 5.2%.

Economic indicators are improving, including that the U.S. economy has added an average of 265,000 jobs per month in the three months through February, the fastest pace since June, Powell noted.

“While this progress is welcome, the job of sustainably restoring 2 percent inflation is not yet done,” he said. “We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent. If the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.”

Investment management firm Pimco said in its six-12 month outlook report released Wednesday that it expects the “the Fed to start normalizing policy at midyear.”

In other distressed paper, AMC Entertainment Holdings, Inc.’s issue of 10% senior secured second-lien notes due 2026 (Caa3/CCC-) was one of the day’s most active issues, a source said.

The bonds went out on a handle in the low 70s and trading about 2¾ points lower on the week on $14 million of volume.

Hughes, DISH mixed

Hughes Satellite’s 6 5/8% senior due 2026 (Caa3/CCC-) climbed over 1¼ points going into the close at 59½ bid on $6 million of volume, a source reported.

The bonds were trading about ½ point better on the week.

The issue went out last week at 59 bid and stayed mostly flat Monday in light trading before supply ramped up Tuesday to $10 million following the company’s announcement.

Hughes Network Systems, LLC announced Tuesday the commercial availability of its Hughes HL1120W Terminal, an electronically steerable antenna-based terminal approved for operation in the low Earth orbit satellite network.

The company now plans to open it for service for enterprise and government uses with the terminal configured to function out of the box and self-pointing to the Eutelsat OneWeb satellite constellation.

DISH DBS’ notes were mixed with the 7¾% senior notes due 2026 (Caa3/CC) up ½ point at 66 bid on $4 million of activity and the 5¼% notes due 2026 (Caa1/CCC) down ½ point at 77¾ bid on $5 million of supply.

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

Independent auditor KPMG LLP announced doubt about the company’s ability to continue as a going concern.

EchoStar said it intended to meet its obligations that were due in March but is seeking funding to cover $1.98 billion of debt that matures in November. The company also had a $3.59 billion payment due Monday 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.

Altice notes decline

Altice France Holding’s 10½% senior notes due 2027 (Ca/CCC-) gave back ¾ point to trade at 37¾ bid in light supply totaling $3 million Wednesday, a market source said.

The bonds had rallied over 2 points on $13 million of volume in the prior session.

Altice’s 8 1/8% senior secured notes due 2028 (Caa1/CCC+) traded mostly flat to slightly weaker with a 78 bid handle on $19 million of volume during the session.

The bonds were little changed from Monday.

The Paris-based telecommunications company’s bonds slid from a handle in the 70s after Altice announced on March 20 weaker quarterly results and following reports the company hired financial and legal advisers.

AMC bonds slip

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were quoted Wednesday trading around 74¾ bid on $14 million of volume, a source said.

The bonds have given back about 2¾ points this week.

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

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

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

The Leawood, Kan.-based movie theater company’s stock (NYSE: AMC) also was heavily traded Wednesday and closed down 2.58% to $3.02.

Distressed returns soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns weakened Tuesday to minus 0.78% from minus 0.39% on Monday.

Month-to-date total returns for April were at negative 1.17% in the second session of the month, wider than negative 0.39% the previous day.

Year-to-date total returns declined Tuesday to 0.94%, down from 1.73% at the start of the week.

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