Ardagh paper mixed as earnings report digested; E.W. Scripps notes bounce around

By Cristal Cody

Tupelo, Miss., April 25 – Ardagh Group SA’s notes stayed mixed in light trading on Thursday as the market digested the company’s interim consolidated first-quarter earnings report.

The 5¼% senior notes due 2027 (Caa1/CCC/CCC) were quiet after going out Wednesday over 2 points better on the week.

Ardagh Packaging Finance plc showed signs of being on the mend with the company’s credit default swap spreads decreased the most among European corporate CDS movers this week.

Earnings reports and the latest round of economic data pressured markets over the session. The benchmark 10-year Treasury note yield rose 5 basis points to 4.7%.

Equities softened. The S&P 500 index fell 0.46%, with the iShares iBoxx High Yield Corporate Bond ETF off 16 cents, or 0.21%, to $76.38.

The CBOE Volatility index declined 3.76% over the day to 15.37.

Although the U.S. economy grew slower than expected at a 1.6% annualized rate, the Commerce Department’s first-quarter gross domestic product report released Thursday “confirms recent Fed messaging about patience before any rate cuts,” BNP Paribas economists said in a note.

“Fed officials looking for more confidence that inflation is headed back down to 2% will not find it in the Q1 GDP report,” BNP said. “With core PCE inflation printing at 3.7% in the quarter, it looks more likely that the 2% pace posted on average over H2 2023 exaggerated the extent of underlying progress.”

Meanwhile, E.W. Scripps Co.’s paper softened in light activity but remained stronger on the week.

Scripps’ notes were trading over 2 points better.

Along with the gain in Scripps’ paper, the company’s CDS spreads saw the biggest decrease in U.S. corporate CDS movers this week with the spreads moving below 1,000 bps.

iHeartCommunications, Inc.’s 8 3/8% senior notes due 2027 (Caa3/CCC+) improved about ½ point over the day and were about 1 point better this week.

However, iHeartCommunications was the softest this week in U.S. corporate CDS movers.

CDS spreads widened over 200 bps and pushed the figure past 3,000 bps.

Ardagh eyed

Ardagh Packaging Finance’s 5¼% senior notes due 2027 (Caa1/C/CCC) were quiet on Thursday after going out the previous day at 52¾ bid, up from 50½ bid on Friday, a market source said.

The 4 1/8% senior secured notes due 2026 (B3/CCC-/B+) traded at 82¼ bid, down from 83¼ bid on Wednesday and 82 5/8 bid at the close of the prior week.

Meanwhile, Ardagh’s CDS spreads firmed 301 bps to 2,692 bps in the week ended Wednesday, according to a Moody’s Ratings report.

Ardagh Group reported that first-quarter revenue fell to $2.17 billion from $2.26 billion a year earlier, while profit losses climbed to $136 million in the quarter from $47 million of losses in the same period last year.

The company reaffirmed its 2024 outlook and full-year 2024 adjusted EBITDA in the $630 million to $660 million range. Second-quarter adjusted EBITDA is guided at $170 million, up from $151 million reported in the second quarter of 2023.

The board cautioned that the interim consolidated financial statements were prepared on a “going concern basis,” according to a regulatory filing with the Securities and Exchange Commission on Thursday.

Ardagh Group operates four segments that include Ardagh Metal Packaging Europe, Ardagh Metal Packaging Americas, Ardagh Glass Packaging Europe & Africa and Ardagh Glass Packaging North America.

S&P Global Ratings announced Thursday it downgraded the Luxembourg-based glass and metal packaging producer and the bonds, based on the company’s plans to redeem its secured notes due in 2025 and a new senior secured credit facility with Apollo Capital Management, LP-managed investment funds and entities that it considers a distressed transaction and equivalent to a default.

Scripps better on week

Scripps’ notes traded around ¼ point to 2 points better on Wednesday on more than $14 million of volume but softened in thin activity on Thursday, according to market sources.

The company’s 5 3/8% senior notes due 2031 (Caa2/B-) slipped 2¼ points to 59¼ bid after trading 2 points higher on Wednesday.

The issue remained around 2¾ points better on the week.

Scripps’ 5 7/8% senior notes due 2027 (Caa2/B-) fell 1 point to 79 bid in thin trading after adding ¼ point the previous day.

The notes were nearly 3 points stronger this week.

Along with the gain in Scripps’ paper, the company’s CDS spreads saw the biggest decreases in U.S. CDS movers this week.

The company’s CDS spreads tightened 188 bps to 887 bps over the week ended Wednesday, Moody’s said.

Scripps is reported to be shopping its Bounce TV network with plans to pay down debt.

The Cincinnati-based company, which operates a portfolio of media brands that includes 60 TV stations, plans to release first-quarter earnings results May 9.

iHeart mixed

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa3/CCC+) improved about ½ point over the day to 53½ bid in mostly light activity, a source said.

The notes were about 1 point better this week.

Looking at CDS spreads, iHeartCommunications was the softest corporate name this week in U.S. corporate CDS movers.

Spreads widened 208 bps for the week ended Wednesday to 3,048 bps, according to a Moody’s report.

San Antonio-based parent and radio station operator iHeartMedia, Inc. will post first-quarter financial results on May 9.

Distressed index declines

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns dropped midweek to negative 0.14% from 0.64% on Tuesday and 0.33% at the start of the week.

Month-to-date total return losses widened to minus 2.45% on Wednesday from minus 2.31% on Tuesday but remained improved from minus 2.94% on Monday.

Year-to-date total return losses were negative 0.37% in the prior session, compared to minus 0.23% on Tuesday and minus 0.87% on Monday.

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