Ardagh paper slides on secured refinancing plans; Allen Media up; market jitters mount

By Cristal Cody

Tupelo, Miss., April 15 – Ardagh Group SA’s senior paper slid on Monday after the company announced plans to refinance up to $1 billion of secured debt.

ARD Finance SA’s 6½% subordinated notes due 2027 (Caa3/CCC) were down to a handle in the low 20s.

Bonds largely were seen lower in the distressed space as surprise economic data sent stocks down and Treasury yields soaring.

The Commerce Department reported on Monday that U.S. retail sales rose in March.

Retail sales advance estimates increased a seasonally adjusted 0.7%, higher than the 0.4% growth analysts forecast and up 4% over March 2023 levels.

The 10-year Treasury note yield shot up 13 basis points to 4.62%, its highest level since November, a source noted.

The Fear Factor index, which ended Friday over 16% higher, climbed 11.09% on Monday to 19.23.

Stock indices all finished lower. The S&P 500 index closed down 1.2% with the iShares iBoxx High Yield Corporate Bond ETF 44 cents, or 0.58%, lower at $75.93.

“It’s mainly they’re worried the Fed is not going to drop rates, especially in June and maybe even throughout the rest of the year,” a source told Prospect News.

Inflation feels like a “part of going forward here,” the source said.

A report from UBS Group AG strategists on Monday of a “real risk” the Federal Reserve may instead hike rates to 6½% sent a ripple through the markets during the session, according to the market source.

“Rates are off all the way through,” the source said of trading over the session. “Higher rates in the long end, especially over the yield curve. Short-term rates are a little bit higher also, inside of a year.”

One distressed name that saw its paper lifted on Monday was Allen Media Group LLC, a source said.

The 10½% senior notes due 2028 (Caa1/CCC) climbed 6¼ points on $15 million of secondary action by late afternoon.

Ardagh mostly drops

Ardagh Group’s paper mostly declined in heavy trading on Monday after the company reported its plans to redeem its secured notes due in 2025, a source said.

ARD Finance’s 6½% subordinated notes due 2027 (Caa3/CCC/CCC-) were quoted at 23 bid on $19 million of volume.

The bonds traded at nearly double that in February.

Ardagh Packaging Finance plc’s 5¼% senior notes due 2027 (Caa1/CCC/CCC) were down around 4¼ points to 5¾ points by late afternoon to the 53¼ bid to 51 bid area on $35 million of action in the secondary market.

The notes were last seen weaker at 51 bid.

The bonds went into the weekend softer after shedding around 1½ points on Friday.

Ardagh Packaging Finance 5¼% senior secured notes due 2025 (B1/B-/B+) that it plans to redeem rallied 3 points to 99¾ bid on $11 million of bonds traded over the session.

Ardagh’s plans to redeem its secured debt will leave it with no bond maturities before August 2026.

Ardagh said its subsidiary, Ardagh Investments Holdings Sarl, entered into the senior secured credit facility with Apollo Capital Management, LP-managed investment funds and entities.

The facility includes an initial €790 million senior secured term loan, a $250 million equivalent senior secured exchange term loan and additional senior secured term loans to fund a debt service reserve account. The facilities due in 2029 are secured on all material assets of Ardagh Investments Holdings.

Ardagh Investments plans to lend approximately €755 million of the proceeds of the initial term loan to Ardagh Packaging Finance and Ardagh Holdings USA Inc. by subscribing to new senior secured notes due 2029 that will be used to redeem in full the $700 million of senior secured notes due 2025.

The facilities are expected to be drawn down in the second quarter.

Ardagh said it continues to evaluate options with its capital structure and may seek to further reduce its debt through discounted open market purchases, tender offers, exchange offers, privately negotiated transactions or more.

The company also reported it expects lower revenue and a lower adjusted EBITDA in the first quarter, in line with previous guidance, when it releases first-quarter results on April 25.

The Luxembourg-based glass and metal packaging producer said liquidity as of March 31 remained strong at approximately $600 million, compared to $700 million as of Dec. 31.

Allen Media jumps

Allen Media LLC’s 10½% senior notes due 2028 (Caa1/CCC) climbed 6¼ points to 47¼ bid on $15 million of secondary trading on Monday, a source said.

The bonds have a face amount of $300 million outstanding.

Allen Media plans to hold a presentation for advertisers on April 24 in New York City to tout its portfolio, which includes The Weather Channel and Local Now.

The Los Angeles-based media and entertainment company founded by Byron Allen reportedly made a $14 billion offer in January to acquire Paramount Global.

Distressed returns soften

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns finished Friday softer at minus 0.39%, down from negative 0.28% on Thursday and 0.58% of positive returns at the week’s start.

Month-to-date total returns declined to negative 1.24% on Friday from minus 0.85% on Thursday and minus 0.68% at the start of the prior week.

Year-to-date total returns fell to 0.87% at the week’s close from 1.26% on Thursday and 1.44% in the week’s first session.

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