Altice notes dominate distressed space, paper up on week; Bausch bonds give back gains

By Cristal Cody

Tupelo, Miss., April 11 – Altice France Holding Restricted Group’s paper mostly softened as the name continued to dominate the distressed secondary market on Thursday on more than $50 million of supply.

The 6% senior notes due 2028 (Ca/CCC-) were down ¼ point, while the 10½% senior notes due 2027 (Ca/CCC-) edged up ¼ point and remained about 4 points better on the week.

Other names in the cable space were mixed with credit default swap spreads widening this week, sources said.

Charter Communications Inc.’s bonds traded about 1/8 point better to ¼ point lower over the day.

Altice USA, Inc. subsidiary CSC Holdings, LLC’s CDS spreads softened a second week and were nearing the 2,000 basis points area.

CDS spreads from DISH DBS Corp. eased more than 75 bps after widening over 100 bps in the prior week.

Bausch Health Cos. Inc.’s paper was one of the day’s biggest movers on more than $35 million of volume across its Caa1- and Ca-rated notes, a source said.

The notes gave back some of Wednesday’s gains but remained stronger on the week.

Bausch’s 11% senior secured first-lien notes due 2028 (Caa1/CCC+/B) were about 3 points better from Monday.

Market tone was mixed as the surprise increase in March inflation data dashed hopes of a summer rate cut by the Federal Reserve.

Stocks mostly mounted a comeback ahead of the kickoff of bank earnings reports on Friday.

The S&P 500 index rose 0.74%, while the iShares iBoxx High Yield Corporate Bond ETF fell 7 cents, or 0.09%, to $76.41.

The CBOE Volatility index declined 5.63% to 14.91.

Treasury yields held onto Wednesday’s steep climb.

The benchmark 10-year note yield, up 19 basis points in the prior session, rose 1 bp to 4.57%.

The Labor Department reported the inflation index rose a seasonally adjusted 0.4%, higher than a 0.3% increase that analysts forecasted.

“In our view, the March CPI print makes a June rate cut untenable, while our forecast for a more gradual decline in inflation makes two cuts this year more likely than three,” according to a BNP Paribas Securities note released to Prospect News.

BNP said it revised its expectations to two rate cuts in July and December from three cuts previously expected in June, September and December.

Meanwhile, first-quarter earnings season kicks off on Friday with the release of financial results from banks including JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.

“The same headwinds and tailwinds are in play for banks this year as in 2023,” according to a report from Christine Short of Wall Street Horizon. “High interest rates still help banks maintain healthy levels of net interest income, but on the flipside have negative implications when they lead to loan defaults from borrowers that can no longer contend with higher costs. The promise of lower interest rates had fueled a rally in the banks this year, but with a tight labor market and stubbornly high inflation readings, that expectation has sputtered.”

Altice mostly lower

Altice France Holding SA’s 10½% senior notes due 2027 (Ca/CCC-) softened over the back half of the week but were up ¼ point on Thursday at 41¾ bid on active supply totaling $13 million, a source said.

The notes were quoted higher on Tuesday at 42½ bid but remained up from going out in the prior week at 38½ bid, 39½ offered.

Altice’s other tranches mostly declined over the session. The 6% senior notes due 2028 (Ca/CCC-) were down ¼ point at 32 bid on $14 million of supply.

The company’s 8 1/8% senior secured notes due 2027 (Caa1/CCC+) gave back around 1¼ points to 79 1/8 bid on $13 million of volume.

Altice France SA’s 5½% senior secured notes due 2028 (Caa1/CCC+) dropped about 1 point to head out at 67 bid on $11 million of trading.

The Paris-based telecommunications company’s bonds sank in March after Altice France lowered its guidance and highlighted potential haircuts for debt holders to reduce its leverage.

Also, Altice USA, Inc. subsidiary CSC Holdings’ CDS spreads widened a second week, according to a Moody’s Investors Service report.

Spreads eased 171 bps over the week ended Wednesday to 1,986 bps after widening 81 bps in the prior week.

Bausch notes soften

Bausch Health’s notes gave back some of Wednesday’s gains on Thursday in activity that totaled more than $35 million, a source said.

The most active were the 11% senior secured first-lien notes due 2028 (Caa1/CCC+/B), which went out at 77½ bid on $11 million of volume.

While ½ point softer on the day, the notes remained up from trading at 74½ bid on Monday.

Bausch Health’s 4 7/8% senior secured notes due 2028 (Caa1/CCC+/B) fell ½ point to 63¾ bid on $5 million of volume on Thursday but also stayed stronger on the week. The bonds were quoted on Monday at 61¼ bid and ending the prior week at 58¼ bid, 59¼ offered.

The company’s 6 1/8% senior secured notes due 2027 (Caa1/CCC+/B) gave back ¼ point to trade at 73¾ bid on $10 million of volume.

Bausch’s 5% senior notes due 2028 (Ca/CCC-) also declined 2¼ points to 49¼ bid in lighter trading during the session.

The Laval, Quebec-based global pharmaceutical company is handling numerous issues, including a lawsuit to protect against generic production of its Xifaxan drug, a securities class action lawsuit over alleged violations of federal securities laws and concerns with its plans to spin off Bausch + Lomb Corp.

Distressed returns decline

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns slipped to negative 0.43% on Wednesday from 0.54% on Tuesday and 0.58% on Monday.

Month-to-date total returns dropped to negative 0.57% midweek, compared to negative 0.14% on Tuesday and minus 0.68% at the start of the week.

Year-to-date total returns were 1.55% on Wednesday versus 1.99% on Tuesday and 1.44% on Monday.

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