Diamond Sports secured notes trade up; Bed Bath & Beyond improves; Diebold, Lumen flat

By Cristal Cody

Tupelo, Miss., Feb. 9 – Diamond Sports Group LLC’s 5 3/8% senior secured notes due 2026 (Caa3/CCC-) edged up ¼ point on $12.5 million of secondary volume that put it among the most active distressed names traded on Thursday.

The issue carried a yield of more than 108%.

Paper yielding more than 106% from Bed Bath & Beyond Inc. also remained active in lighter action in the distressed market on Thursday.

The retailer’s 3.749% senior notes due 2024 (C/D) added 3¾ points on $3.2 million of paper traded.

In the broader markets, stocks saw further declines during the session with measured market volatility up more than 5%. The S&P 500 index fell 0.88%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 49 cents, or 0.65%, to $75.36.

The CBOE Volatility index increased 5.25% to $20.66.

Diebold Nixdorf Inc.’s bonds remained in the low 50s amidst a weak fourth-quarter earnings report due out Thursday.

Lumen Technologies, Inc.’s paper was modestly better after declining Wednesday, while the company’s credit default swap spreads widened this week.

CDS spreads from former Lumen subsidiary Embarq Corp. also weakened.

Embarq’s CDS spreads moved out 413 basis points over the past week ended Wednesday to 1,602 bps, according to a Moody’s Investors Service report.

Embarq’s CDS spreads were 33 bps wider in the prior week.

The Overland Park, Kan.-based telecommunications company was acquired in 2022 by Connect Holding II LLC, doing business as Brightspeed, from Lumen.

Retail CDS spreads

CDS spreads from some retailers tightened this week.

Liberty Interactive LLC’s CDS spreads came in 74 bps, Nordstrom, Inc.’s CDS spreads firmed 66 bps, Kohl’s Corp.’s CDS spreads tightened 42 bps and Macy’s Retail Holdings, LLC improved 60 bps over the past week ended Wednesday, according to the Moody’s report on Thursday.

Meanwhile, Rite Aid Corp.’s CDS spreads moved out again after tightening the previous week.

Rite Aid’s CDS spreads eased 121 bps for the past week ended Wednesday to 4,439 bps, Moody’s said.

The drugstore chain’s CDS spreads had tightened 225 bps in the prior week.

Diamond Sports up

In the secondary market, Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa3/CCC-) added ¼ point on $12.5 million of trading on Thursday, a source said.

The bonds were quoted at 9½ bid.

The issue had traded up ½ point on $3 million of volume in Wednesday’s session.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/C) also gained ½ point on Thursday to a quote of 3 3/8 bid in strong trading that totaled nearly $9 million.

The bonds were 1/8 point better on $3 million of secondary supply on Wednesday.

The Chesapeake, Va.-based sports broadcast company has a $140 million interest payment due in February, according to a Fitch Ratings note.

Bed Bath & Beyond higher

Bed Bath & Beyond’s 3.749% senior notes due 2024 (C/D) hit 30 bid by the close on Thursday, up nearly 3¾ points, a source said.

Volume was light on $3.2 million of paper traded.

The issue added 3¾ points on $2.5 million of supply on Wednesday.

Looking at the retailer’s other notes, Bed Bath & Beyond’s 4.195% senior notes due 2034 (C/D) also improved 1 point to a 17 handle on about $2 million of trading on Thursday.

The bonds were down more than ½ point on $8.7 million of volume in the previous session.

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) continued to gain with the issue about ¾ point better near the 17 bid area on $9 million of volume on Thursday.

The bonds went out Wednesday up nearly 2 points on $5 million of volume.

Bed Bath Beyond’s paper had sunk to under 10 bid before the convertible preferred stock and warrants offering was announced on Monday with the company facing bankruptcy after defaulting on bond and loan payments.

The Union, N.J.-based home products retailer is expected to use availability under its credit facilities from the preferred offering to pay the missed interest payment on its senior notes by March 3.

Diebold Nixdorf flat

Diebold Nixdorf’s 8½% senior notes due 2024 (Ca/CCC-) have been little changed and trading in the low 50s, a market source said.

The bonds were seen at the start of the week at 51¼ bid on $7 million of volume.

The ATM manufacturer on Thursday reported fourth-quarter losses of $152 million, or $1.92 a share, wider than the $37.6 million, or 49 cents a share, quarterly loss a year ago.

The Hudson, Ohio-based financial and retail technology company also reported Thursday that a TSA amendment requires that $52 million of the remaining $72 million outstanding of 8½% legacy senior notes due April 2024 be taken out by April 15, 2024.

Diebold Nixdorf said that process would happen either via a public exchange offering or an equity issuance.

The company also said that because the process is not fully within the company’s control under accounting standards, “substantial doubt will continue to exist regarding our ability to continue as a going concern as of the issuance of our 2022 form 10-K.”

The Hudson, Ohio-based financial and retail technology company conducted exchange offers in December for the 8½% notes, 9 3/8% notes and the 9% euro-denominated senior secured notes due 2025 issued by Diebold Nixdorf Dutch Holding BV.

Lumen slightly better

Lumen’s 4½% notes due 2029 (B2/B+) recovered about ¼ point in light trading totaling $3.5 million on Thursday, a source said.

The bonds were seen at 61½ bid.

The issue had dropped more than 3 points on $12.7 million of volume on Wednesday.

Lumen’s 7.6% notes due 2039 (B2/B+) also added 1 point over the day to trade at 57 bid in thin supply totaling $1.7 million.

Lumen’s paper slid about 3½ points to more than 8 points on Wednesday after the company reported fourth-quarter and fiscal 2022 losses.

The Denver-based telecommunications company’s CDS spreads widened 334 bps for the past week ended Wednesday to 1,290 bps, Moody’s said.

Distressed returns dip

S&P U.S. High Yield Corporate Distressed Bond index one-day returns were at minus 0.1% on Wednesday, compared to 0.63% on Tuesday and minus 0.69% on Monday.

Month-to-date returns were 1.65% midweek versus 1.76% on Tuesday and 1.12% at the start of the week.

Quarterly and year-to-date total returns were 9.77% on Wednesday, 9.89% on Tuesday and 9.2% on Monday.

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