iHeart continues slide, Valeant, Concordia continue struggles; Walter rebounds, Exco up

By Paul Deckelman

New York, March 17 – iHeartCommunications Inc.’s bonds continued to retreat on Friday in the wake of the broadcasting and outdoor advertising giant’s recently unveiled plans for a private debt exchange – which prompted downgrades from several ratings agencies.

Elsewhere in the distressed debt sphere, traders saw the bonds of Canadian drug manufacturers Valeant Pharmaceuticals International Inc. and Concordia International Corp. continuing to lose ground.

Retailer Neiman Marcus Group – which had recently firmed on news that it was exploring strategic alternatives – was seen lower on Friday.

On the upside, mortgage servicing company Walter Investment Management was seen on the rebound after having retreated earlier in the week on disappointing earnings.

And energy operator Exco Resources Inc.’s bonds gained despite its report of a fourth-quarter loss after the company also announced several of what it termed “transformational” capital structure transactions.

iHeart issues trade off

A trader saw iHeartCommunications’ notes on the downside on Friday, noting that the San Antonio, Texas-based radio broadcaster and outdoor advertising company’s paper “was pretty active.”

He saw “a ton of trades” in the company’s 9% notes due 2021, seeing them end at 75¼ bid, off ¼ point on the session.

More than $42 million of those bonds changed hands Friday, putting the credit in a first-place tie for junk bond market volume leader with the new six-year bonds from Canadian metals mining company First Quantum Minerals Ltd.

He also saw iHeart’s 11½% notes due 2021 off 1½ points on the day at 77½ bid, “on pretty good volume.”

And its 9% notes due 2019 lost ¾ point to end at 82¼ bid.

At another desk, a trader marked the company’s 10 5/8% notes due 2023 down 2½ points on the day at 75 bid.

It was the second straight day that iHeart paper has been under pressure.

It was also down on Thursday after two ratings agencies responded negatively to the company’s Wednesday announcement of a private exchange offer for five series of priority guarantee notes and senior notes due 2021 in connection with a proposed debt restructuring. It is also mounting a debt exchange offer to lenders of the company’s term loan D and term loan E facilities

iHeart said that it hopes to restructure around $14.6 billion in debt.

In response, Fitch Ratings downgraded iHeartCommunications, Inc.’s long-term issuer default rating to C from CC.

Noting its high debt load, coupled with its high leverage, Standard & Poor’s downgraded the corporate credit rating on iHeartCommunications and its parent company, iHeartMedia Inc., to CC from CCC after the company’s announcement of the private exchange offer.

The offer at hand will exchange the notes and loans for longer-dated debt but they may also be exchanged for stock and warrants or contingent value rights, S&P noted.

Under all but one scenario, there would be a reduction in the principal amount of debt outstanding and an extension of the debt maturity by two years for exchanged debt, the agency said.

Valeant, Concordia off

Elsewhere, traders saw lower levels in the bonds of beleaguered Canadian drug manufacturers Valeant Pharmaceuticals International and Concordia International.

Laval, Que.-based Valeant’s new 7% notes due 2024 eased by 1/8 point to 102 bid, on volume of over $12 million.

Its existing 5 3/8% notes due 2020 were seen down more than 5/8 point, ending at 87 5/8 bid, with over $17 million traded.

Valeant’s 7% notes due 2020 were off by 1 5/8 points at 89½ bid.

Oakville, Ont.-based Concordia’s paper “has had trouble getting out of its own way,” a trader noted.

He said that its 9½% notes due 2022 ended down ¾ point to 22½ bid, on “maybe a half-dozen trades.”

Both companies are laden with debt, and are trying to transition away from business plans involving aggressive acquisitions.

Neiman Marcus retreats

A trader said that Dallas-based retailer Neiman “was down a lot today, after having had a rebound over the last couple of days,” on the news that the company will explore strategic options that could include a debt recapitalization or the sale of company.

News reports indicated that Canadian high-end retailer Hudson’s Bay Co. had entered into talks for a possible acquisition of Neiman Marcus.

The trader saw its 8% notes due 2021 down ¾ point to end at 59¼ bid.

Walter, EXCO gain

A trader said that Walter Investment Management’s 7 7/8% notes due 2021 rose by more than 2¼ points Friday to end just under 64 bid.

The Tampa, Fla.-based residential mortgage servicing company’s paper had fallen on Thursday, two sessions after it announced a $22.2 million loss in the quarter.

A trader said EXCO Resources’ 8½% notes due 2022 “jumped more than 5½ points” on Friday to end at 52½ bid.

The bonds rose despite Thursday’s announcement by the Dallas-based oil and natural gas company of a 2016 fourth-quarter loss.

EXCO also said it had entered into “a series of transactions that will significantly improve” its capital structure, including the issuance of $300 million of senior secured 1.5 lien notes due March 20, 2022 and the exchange of approximately $683 million of senior secured second-lien term loans due Oct. 26, 2020 for a like amount of senior secured 1.75 lien term loans also due Oct. 26, 2020.

-Colin Hanner contributed to this review

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