Distressed paper higher as yields drop; WW bonds improve; DISH notes climb; AMC gains

By Cristal Cody

Tupelo, Miss., April 29 – Overall secondary market action stayed fairly subdued with under $130 million of distressed paper traded just ahead of the close on Monday with a focus on new issues.

Some of the most active distressed names were logging volumes in the $4 million to $6 million range.

Despite the lighter supply, distressed paper mostly improved with bonds trading around ¼ point to more than 1 point better by late afternoon.

WW International Inc.’s 4½% senior secured notes due 2029 (Caa1/CCC+) climbed 1¼ points over the day and were trading around 5 points better since last week.

DISH DBS Corp.’s paper bounced higher in the secondary market following reports bondholders filed a lawsuit on Friday against the issuer.

The 5¾% senior secured notes due 2028 (Caa1/CCC) climbed 1½ points.

DISH’s 5 1/8% senior notes due 2029 (Caa3/CCC-) rose 2 points.

AMC Entertainment Holdings, Inc.’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) added ¾ point on Monday in the first session after the company posted preliminary first-quarter results with the paper knocking on a 70s handle.

Market tone was positive with stock indices edging up, Treasury yields receding and volatility waning ahead of the Federal Reserve’s rate decision due Wednesday and the April jobs report on Friday.

The benchmark 10-year Treasury note yield settled down 5 basis points to 4.61%.

The CBOE Volatility index was over 2% lower at 14.67.

The S&P 500 index closed up 0.32%, while the iShares iBoxx High Yield Corporate Bond ETF added 23 cents, or 0.3%, to $76.85.

“Yields were down some today,” a source said. “In the absence of any clear economic data that suggests rates should be going lower, that’s what’s really driving the price today.”

No rate changes are expected at the Federal Reserve’s monetary policy meeting on Wednesday, but market participants will be focused on “what commentary comes out of it,” the source said.

Meanwhile, first-quarter default debt dollar volume jumped to $33 billion from $19 billion in the fourth quarter, though the number of non-financial corporate defaults was flat at 20 in both quarters, according to a Moody’s Ratings report on Monday.

The issuer-weighted speculative-grade default rate stood at around 5.8% on a 12-month trailing basis – the highest in three years, Moody’s said.

“Nearly two thirds of the Q1 defaults were large companies, each defaulting on more than $1 billion of debt,” according to the report.

Fitch Ratings said in a note on Monday that higher-for-longer rates and approaching maturity walls will drive up junk and leveraged loan defaults, including distressed debt exchanges and bankruptcies.

The trailing 12-month high-yield default rate edged up to 3.8% in March from 3.7% in February with Fitch estimating 2024 default rates of 3½% to 4% for leveraged loans and 5% to 5½% for junk bonds, up from 2023 default rates of 3.3% for leveraged loans and 2.8% for high yield.

WW paper up

WW International’s 4½% senior secured first-lien notes due 2029 (Caa1/CCC+) headed 1¼ points higher on Monday in one of the day’s most active distressed names traded, a source said.

The bonds traded late afternoon at 42¼ bid, around 5 points better than where the issue was seen early last week on a 37 bid handle.

On Friday, the notes added over 2 points.

WW’s bonds and stock were pressured in February and March as the company faces weaker financial results, the exit of longtime board member Oprah Winfrey following the May annual shareholders meeting and ratings downgrades.

WW International will report first-quarter earnings results after the market closes on Thursday.

The New York-based WeightWatchers operator’s stock (Nasdaq: WW) hit new 52-week lows in March.

Shares closed over 6% higher on Monday to $1.86.

DISH continues ride higher

DISH’s paper moved up on Monday in steady trading with the issuer’s bonds seen as much as 2 points higher, a source said.

The company’s 7¾% senior notes due 2026 (Caa3/CCC-) headed into the close 1¾ points better around 63¼ bid.

The 5 1/8% senior notes due 2029 (Caa3/CCC-) rose 2 points to head out at 41 bid.

The 5¾% senior secured notes due 2028 (Caa1/CCC) climbed 1½ points to 67½ bid on $6 million of volume in the name’s most active tranche.

On Friday, bondholders of DISH’s 7¾% tranche and its 5¼% senior notes due 2026 reportedly filed a lawsuit in New York Supreme Court against DISH Network Corp. over its transfers of assets in January after it was acquired in December by EchoStar Corp.

DISH did not release a statement regarding the lawsuit by press time Monday.

Also over the weekend, DISH and Cox Media Group settled a dispute with the companies announcing Saturday that a new multi-year agreement was reached that restored all Cox Media stations on DISH.

EchoStar reported heavy fiscal 2023 losses in February after it terminated bond exchange offers for four tranches of DISH notes in January and two tranches of convertible bonds in February due to lack of participation.

EchoStar currently is seeking funding to cover $1.98 billion of DISH’s debt that matures in November.

The Englewood, Colo.-based satellite owner also operates HughesNet, Boost Mobile and Sling TV.

AMC bonds gain

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) traded ¾ point better on Monday at 69½ bid after adding under 1 point in the prior week, according to a market source.

Trading was light with $4 million of volume reported by Monday afternoon.

AMC announced in preliminary unaudited first-quarter results released after the markets closed Friday that it expects slightly lower total revenue, while net losses are projected lower.

Full-quarter results will be released on May 8.

The Leawood, Kan.-based movie theater company’s stock (NYSE: AMC) dropped over 11% on Monday to $3.03.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns finished the prior week at 0.44%, up from negative 0.91% on Thursday, negative 0.14% on Wednesday and 0.33% at the start of the week. Returns saw the weekly high of 0.64% on Tuesday.

Month-to-date total returns were negative 2.92% on Friday versus negative 3.34% on Thursday, minus 2.45% on Wednesday, minus 2.31% on Tuesday and minus 2.94% in the week’s first session.

Year-to-date total returns ended the week at negative 0.95%, compared to negative 1.28% on Thursday, negative 0.37% on Wednesday, minus 0.23% on Tuesday and minus 0.87% at the week’s start.

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