Bausch bonds lead distressed gains; iHeart paper steady to weaker; Cumulus Media quiet

By Cristal Cody

Tupelo, Miss., April 10 – Bonds mostly dove lower on Wednesday with several distressed names including Altice France Holding Restricted Group, DISH DBS Corp., Level 3 Financing, Inc. and Michaels Cos, Inc. down 1 point or more, sources said.

Volatility was 8% higher over the afternoon following the release of March inflation data and the release of the minutes from the Federal Reserve’s March policy meeting.

One of the few gainers in the distressed market were bonds from Bausch Health Cos. Inc., which traded around ½ point to 3 points higher, market sources said.

Bausch’s 4 7/8% senior secured notes due 2028 (Caa1/CCC+/B) have climbed over 5 points this week.

iHeartCommunications, Inc.’s notes traded flat to lower with the 8 3/8% senior notes due 2027 (Caa3/CCC+) steady in strong volume that put it among the day’s most active junk bonds.

Cumulus Media Inc.’s 6¾% senior secured first-lien notes due 2026 (Caa1/CC) have been thinly traded in April.

The radio space has been pressured this year with already one default in January from Audacy Inc., which filed for Chapter 11 bankruptcy after missing interest payments.

Cumulus Media reported on Wednesday that it extended the expiration of a distressed exchange offer for the 2026 notes a third time.

“These companies that are consumer-related, as well as have higher leverage, are struggling in this environment,” Michael Kupinski, senior research analyst at Noble Capital Markets, Inc., told Prospect News on Wednesday. “By this time, investors had anticipated the Fed was going to give some rate reduction action. However, given the inflation numbers, that prospect seems like it’s getting pushed downward. The market doesn’t like the uncertainty.”

Stocks declined and Treasury yields shot up following the surprise inflation increase announced Wednesday.

The Labor Department reported the Consumer Price Index for March increased a seasonally adjusted 0.4%, higher than a 0.3% increase analysts forecast.

The all items index also rose 3.5% for the 12 months ended March, up from a 3.2% increase in February.

Equity indices all declined with the S&P 500 index off 0.95% by the close.

The benchmark 10-year note yield jumped 19 basis points to 4.56%.

The CBOE Volatility index rose around 8% but pulled back by the close to 15.80, up 5.47%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 68 cents, or 0.88%, to end at $76.48.

Bausch moves higher

Bausch Health’s notes traded around ½ point to 3 points higher in some of the day’s most active issues, sources said.

The 4 7/8% senior secured notes due 2028 (Caa1/CCC+/B) were up 3 points to 64½ bid.

The bonds have climbed from trading at 61¼ bid on Monday and 58¼ bid, 59¼ offered on Friday.

Bausch’s 5¼% senior notes due 2030 (Ca/CCC-) saw the heaviest action on Wednesday on $13 million of volume. The notes rose 1¾ points to 47¼ bid.

Bausch’s 5% senior notes due 2028 (Ca/CCC-) also added ½ point over the session to a quote of 52 bid on $6 million of volume.

The Laval, Quebec-based global pharmaceutical company announced on Friday that it and its gastroenterology business, Salix Pharmaceuticals, Inc., filed a lawsuit in the U.S. District Court for the District of New Jersey against Amneal Pharmaceuticals of New York, LLC and affiliates to fight generic use of its Xifaxan drug.

iHeart flat to lower

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa3/CCC+) went out flat in heavy trading that put it among the most active junk bonds traded on Wednesday, a source said.

The bonds were unchanged at 56 bid on $11 million of secondary supply.

iHeartCommunications’ 4¾% senior secured notes due 2028 (Caa1/B-) were down more than 1 point at 69¾ bid in mostly light trading.

San Antonio-based parent iHeartMedia, Inc. operates broadcast and digital streaming radio businesses.

Cumulus Media quiet

Cumulus Media New Holdings Inc.’s 6¾% senior secured first-lien notes due 2026 (Caa1/CC) have been thinly traded in April and were last seen around 59 bid, a source said on Wednesday.

The bonds traded with a 68 bid handle at the end of 2023.

Cumulus Media said Wednesday that subsidiary Cumulus Media New Holdings extended the expiration time of its Feb. 27 offer to exchange the $346 million of outstanding 2026 notes for new 8¾% senior secured first-lien notes due 2029 to Friday.

The company previously extended the expiration time from April 2 and March 26.

As of Tuesday, Cumulus Media said about $15 million of the notes had been tendered for exchange, unchanged from the amount tendered as of the original deadline.

The company is offering to exchange the notes at a 20% to 23% discount from the principal, which Moody’s Investors Service said in March will likely be viewed as distressed exchanges.

Cumulus Media also is offering to exchange its $330 million senior secured term loan due 2026.

The company has a lackluster first quarter expected but is expected to get some help in the fourth quarter, according to Noble Capital.

Cumulus Media should show some traction “in the back half of the year” with revenue from political advertising in the U.S. presidential election, Kupinski said.

“That should help the company’s cash flow because political advertising carries very high margins,” he said.

Political advertising gains should start to show in the third quarter but will be predominantly over the fourth quarter.

Noble lowered its full-year 2024 revenue estimate for Cumulus Media to $859.5 million from $887.3 million.

The Atlanta-based audio media company owns and operates 403 radio stations in 85 markets.

Distressed index

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined to 0.54% on Tuesday from 0.58% on Monday.

Month-to-date total returns improved to negative 0.14% from minus 0.68% at the start of the week.

Year-to-date total returns rose to 1.99% on Tuesday from 1.44% Monday.

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