Morning Commentary: DISH convertible notes in focus on exchange offer

By Abigail W. Adams

Portland, Me., Jan. 16 – The convertible secondary space had a relatively active start to the day on Tuesday with topical news moving the market on a mixed open for equities.

The Dow Jones industrial average was down 123 points, or 0.33%, the S&P 500 index was down 0.04%, the Nasdaq Composite index was up 0.18% and the Russell 2000 index was down 0.65% shortly before 11 a.m. ET.

There was $71 million in reported convertible bond trading volume about one hour into the session with DISH Network Corp. continuing to move the tape.

DISH’s 0% convertible notes due 2025 and 3.375% convertible notes due 2026 were mixed after EchoStar Corp. launched an exchange offer for the full outstanding amounts of the notes.

The 0% notes due 2025 were largely unchanged following the announcement of the exchange offer and consent solicitations.

They continued to trade in the 67.5 to 68.5 context, a source said.

There was $9 million in reported volume.

DISH’s 3.375% convertible notes gained 1.5 to 2 points on the news with the notes wrapped around 57 in early trade.

There was $4 million in reported volume.

DISH’s 2.375% convertible notes due March 15, 2024 were unchanged in light volume with the notes not covered by the exchange offer.

The 2.375% notes continued to trade at 97.25 with a yield of about 19.5%.

DISH announced late Friday that it was launching an exchange offer for the 2025 and 2026 convertible notes.

The company is offering to exchange the convertible notes for new EchoStar 10% senior secured notes due 2030.

The exchange consideration for the 0% convertible notes due 2025 is $610 and for the 3.375% convertible notes is $510, with both considerations based on $1,000-par notes, Prospect News reported.

EchoStar is securing the notes with the spectrum licenses involved in the highly controversial asset transfer that sparked a fire-sale in DISH DBS Corp.’s senior notes last week and raised the prospects of a legal battle with creditors.

In addition, EchoStar announced early Tuesday an exchange offer for four series of senior notes issued by DISH DBS.

The new 10% senior secured notes due 2030 and 10% senior secured notes due 2034 will be issued by EchoStar’s newly formed subsidiary DISH DBS LLC and secured by the assets attributed to the subsidiary, which include DISH TV subscribers.

The transfer of the wireless spectrum assets outside of the reach of DISH DBS creditors raised the ire of investors with the company seemingly leaving the debt and weaker assets of the company with DISH DBS’ side of the capital structure, sources said.

© 2015 Prospect News.
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