Diebold bonds decline on Chapter 11 report; CCC-rated bonds eyed; Virgin Media gains

By Cristal Cody

Tupelo, Miss., May 30 – Diebold Nixdorf Inc.’s bonds hit the skids on Tuesday after the company reported it plans to file a pre-packaged Chapter 11 bankruptcy filing.

“Wow,” one trader said at the drop from Friday’s levels.

The ATM manufacturer’s 8½% senior notes due 2024 (Ca/CC) fell to a 1 bid handle, while the CCC-rated 9 3/8% senior secured notes due 2025 (Caa2/CCC) were the issuer’s “better” bonds, though it has declined about 10 points from last week, the source said.

Stocks were mixed, while volatility waned on Tuesday in post-holiday trading and after an agreement was announced to avert a U.S. debt default in June.

The iShares iBoxx High Yield Corporate Bond ETF added 32 cents, or 0.43%, to $74.34.

The CBOE Volatility index was unchanged at the close at 17.46.

Trading action picked up from Friday’s low volume, but not significantly, according to market sources.

“It was somewhat quiet,” a source said Tuesday. “A lot of the guys were looking for triple-C bonds. It was not that busy.”

Virgin Media Inc.’s 6 3/8% notes due 2028 jumped 13½ points on Tuesday on nearly $10 million of trading.

The bonds remained well embedded in the distressed space trading under a 30 handle and carrying a yield of more than 40%.

Diebold Nixdorf drops

Diebold Nixdorf’s paper was “actually awful” following the declines in trading after the company’s early morning restructuring announcement, a source said.

The 8½% senior notes due 2026 (Ca/CC) were quoted at 3¾ bid on $1.5 million of trading on Tuesday.

In the prior week, the issue traded around 17½ bid.

The company’s 9 3/8% senior secured notes due 2025 (Caa2/CCC) were quoted hanging in at 28 bid on nearly $6.5 million of volume on Tuesday.

The issue was not seen moving in the secondary market on Friday but has softened from where it traded in the high 30s in the prior week, the source added.

Diebold Nixdorf’s 8½% senior notes due 2024 (Ca/CC) also were quoted Tuesday down nearly 4 points at 1 bid in thin trading.

A week ago, the notes traded at 11 bid, 13 offered.

The issue traded on Friday around 5 bid with accrued interest.

Diebold Nixdorf’s exchange offer for the 8½% notes was extended in the prior week to June 5.

The Chapter 11 announcement comes ahead of a debt payment due in June.

In March, Diebold Nixdorf amended its credit facility to add a new $55 million first-in-last-out term loan tranche due in June, according to a Fitch Ratings report.

Diebold Nixdorf said in Tuesday’s release that it entered into a restructuring agreement with key financial stakeholders for a comprehensive debt restructuring transaction that will “significantly reduce debt and leverage levels and provide substantial additional liquidity to support seamless ongoing operations and establish a long-term, sustainable capital structure for the company.”

Common shares will be canceled, and stockholders will not receive any recovery.

The Hudson, Ohio-based financial and retail technology company conducted a distressed exchange in December.

Virgin Media rallies

Virgin Media’s 6 3/8% notes due 2028 jumped 13½ points on Tuesday to head out at 28½ bid in strong distressed secondary action, a source said.

The bonds saw $9.3 million of trading.

Virgin Media is a Reading, U.K.-based telecommunications company.

Distressed returns

S&P U.S. High Yield Corporate Distressed Bond index one-day returns finished the prior week at minus 0.08%, compared to 0.38% on Thursday, minus 0.75% on Wednesday, 0.17% on Tuesday and 0.14% at the start of the prior week.

Month-to-date total return losses closed out Friday at minus 0.63% versus minus 0.35% at the week’s start.

Year-to-date total returns were 6.65% on Friday, down from 6.95% in the first session of the week.

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