DISH destruction continues after asset shuffle; EchoStar notes lifted in secondary

By Abigail W. Adams

Portland, Me., Jan. 11 – The distressed debt space was soft on Thursday with the latest Consumer Price Index report coming in stronger than expected.

While a stronger inflationary print than anticipated, the report did little to change the market’s forecasts for rate cuts.

And while distressed debt saw a weak open, it pared its losses alongside the broader market into the close, a source said.

Rates and refinancing risk will be a focal point for distressed credits in the months to come, sources say.

However, topical news remained the driver of activity in the space on Thursday with the destruction in DISH Network Corp.’s senior notes issued by DISH DBS Corp. continuing.

DISH’s senior notes sank another 2 to 6 points as market players assessed the impact of the company’s asset reshuffle following the completion of its merger with EchoStar.

While DISH’s senior notes continued to collapse, EchoStar Corp.’s 6 5/8% senior notes due 2026 (B2/CCC+) continued their upward momentum with EchoStar’s portion of the capital structure a benefactor of the asset shuffle.

DISH tanks again

DISH’s senior notes continued to plunge on Thursday after the company announced it was transferring some of its unencumbered wireless spectrum licenses to the newly formed subsidiary EchoStar Wireless Holding LLC.

The 7¾% senior notes due 2026 (Caa2/B-) sank another 4½ points to close the day at 58½, a source said. The yield jumped to 34%.

There was $60 million in reported volume.

The notes sank 7 points the previous session.

The 7 3/8% senior notes due 2028 tumbled another 6½ points to close the day at 43½. The yield rose to 32%.

The notes sank 8 points the previous session.

There was $8 million in reported volume.

The 5 1/8% senior notes due 2029 sank another 6 points to close the day at 38½ with the yield now 27 7/8%.

There was $45 million in reported volume.

The notes sank 7 points the previous session.

DISH’s announcement of its asset reshuffle on Wednesday sparked a fire-sale in the company’s senior notes, which have plunged 10 to 15 points over the past two sessions.

DISH was transferring its assets to the EchoStar part of its capital structure and putting them out of reach of creditors, a source said.

The move was leaving the company’s debt with the weaker part of the newly merged company, another source said.

EchoStar lifted

While the fire-sale in DISH’s senior notes continued Thursday, EchoStar’s 6 5/8% senior notes due 2026 continued to improve with the asset reshuffle a positive for EchoStar’s portion of the capital structure, a source said.

The 6 5/8% notes rose another ½ point to close the day at 76 with the yield about 19%.

There was $22 million in reported volume.

The 6 5/8% notes gained 2 points on Wednesday.

Indexes

The S&P High Yield Corporate Distressed index fell 0.83% on Wednesday with the year-to-date return now negative 1.79%.

The index was up 0.49% on Tuesday and 0.21% on Monday.

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