Diamond Sports active; Sinclair pressured; Revlon, Bed Bath & Beyond trade; Lumen drops

By Cristal Cody

Tupelo, Miss., Feb. 21 – Diamond Sports Group LLC’s paper saw strong trading action on Tuesday as concerns grow that a potential bankruptcy could cut into coverage of the upcoming baseball season.

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa3/D) were “the most active distressed name,” a source said.

The bonds were mostly unchanged from Friday.

Fitch Ratings said in a note on Friday that the “likely Diamond Sports Group bankruptcy filing could cause cash flow strain for sports teams if DSG local media contracts are renegotiated or canceled.”

Diamond Sports is the largest regional sports network in the country and has local media rights for 42 professional sports teams across Major League Baseball, the National Basketball Association and National Hockey League.

“There is uncertainty as to whether DSG will be willing or able to honor its obligations under these contracts in a bankruptcy proceeding,” Fitch said, noting the most risk is for baseball coverage, which begins in April. “In a best-case scenario for teams, DSG would continue to make payments and broadcast games on the existing, fully-contracted basis.”

Bonds from the parent company also were under pressure after Diamond Sports missed a $140 million interest payment last Wednesday, according to market sources.

Sinclair Television Group Inc.’s 5½% senior notes due 2030 (B2/B-) ended the prior week down about 4 points on a 78 bid handle on strong trading totaling $23 million, BofA Securities analysts said in a research note.

Distressed paper from Revlon, Inc. and Bed Bath & Beyond Inc. also stayed active on Tuesday.

Bed Bath & Beyond’s notes mostly traded flat to softer.

“They’re pretty much where they were Friday, maybe down ½ point,” a source said.

Revlon’s 6¼% senior notes due 2024 were active but mostly unchanged on Tuesday following news the bankrupt cosmetics company entered into an amended and restated restructuring support agreement with creditors.

Trading overall was on the light side in the riskiest of issues.

“Not too much in distressed land,” one source said of the day’s secondary action.

Lumen Technologies, Inc.’s 4½% notes due 2029 (B2/B+) stood out on Tuesday with the issue dropping below a 50 handle, according to a market source.

The bonds were down 2¾ points on more than $10 million of volume.

Markets were under pressure with stocks down widely following the long holiday weekend. The S&P 500 index closed off 2%.

The iShares iBoxx High Yield Corporate Bond ETF fell $1.15, or 1.54%, to $73.41.

The CBOE Volatility index rose nearly 8% to 22.87.

Diamond Sports active

Distressed sports broadcaster Diamond Sports’ paper was mostly unchanged but saw strong trading of around $7 million on Tuesday, sources said.

Diamond Sports’ 5 3/8% notes due 2026 (Caa3/D) were quoted flat to about ¼ point better from Friday at 11¼ bid, 12¼ offered.

Another source saw the notes down about ½ point at the 11½ area and yielding 89% during the session.

The company’s 6 5/8% senior notes due 2027 (Ca/D) traded flat at 2¾ bid, 3¾ offered going out the door on Tuesday.

The Chesapeake, Va.-based sports broadcast company reported it missed $140 million of interest payments on three tranches of notes due Feb. 15, 2023 and has entered into a 30-day default grace period.

Bed Bath & Beyond flat

Bed Bath & Beyond’s 5.165% senior notes due 2044 (C/D) slipped about ½ point to 11 bid, 12 offered in trading on Tuesday, a source said.

The distressed retailer’s 3.749% notes due 2024 also were down about 1 point from Friday at 27 bid, 28 offered during the session.

The distressed retailer staved off a bankruptcy when it priced a $225 million convertible preferred stock and warrants offering on Feb. 7. Market sources are eying whether the company makes the bond payments it missed this month.

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

“They pay their coupon, they have basically another six months until the next one’s due,” a source said. “If they don’t pay their coupon, that could be accelerated and will probably cause them to file bankruptcy.”

Revlon notes trade

Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 changed hands around the 5 bid, 6 offered area on Tuesday on about $4 million of trading, a source said.

The notes were mostly unchanged but active following Revlon’s announcement that it entered into an amended and restated restructuring support agreement with creditors.

Revlon reported in a regulatory filing on Tuesday that it expects to start the solicitation of votes to accept or reject the amended plan by Feb. 28.

Bondholders are not expected “to get too much out of the bankruptcy,” a source noted.

The New York-based hair color products and cosmetics company filed for Chapter 11 bankruptcy on June 15 in the U.S. Bankruptcy Court for the Southern District of New York.

Lumen paper declines

Lumen’s 4½% notes due 2029 (B2/B+) were down 2¾ points at 49 bid and yielding almost 20% on about $10.5 million of secondary trading on Tuesday, a source said.

The issue went out Friday 1 5/8 points lower.

The Denver-based telecommunications company’s notes have given back about 8¾ points since Feb. 13.

Distressed returns dip

S&P U.S. High Yield Corporate Distressed Bond index one-day returns went out Friday lower at minus 0.45%, compared to 0.45% on Thursday, minus 0.07% on Wednesday, 0.13% on Tuesday and 0.03% at the prior week’s start.

Month-to-date returns were down to 0.5% going into the holiday weekend, compared to 0.95% on Thursday, 0.5% on Wednesday, 0.57% on Tuesday and 0.44% in the first session of the week.

Quarterly and year-to-date total returns were 8.52% on Friday, 9.01% on Thursday, 8.52% on Wednesday, 8.6% on Tuesday and 8.46% in the Feb. 13 session.

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