Canacol Energy notes decline; Altice France paper mixed on week; DISH securities soften

By Cristal Cody

Tupelo, Miss., April 5 – Overall secondary action slowed Friday in the distressed space with a few names standing out as market tone gained on stronger-than-expected March jobs data.

Canacol Energy Ltd.'s senior notes declined in one of the more strongly traded issues after a downgrade from Moody’s Ratings.

“Canacol Energy was active today,” a source reported. “A little under $10 million traded.”

Canacol’s 5¾ senior notes due 2028 (Caa1/BB-/B) were closing the day about 3 points lower on the week.

Paper from Altice France Holding Restricted Group’s and affiliates continued to be “pretty active” in the junk and distressed secondary markets Friday, a source said.

Altice France Holding SA’s 10½% senior notes due 2027 (Ca/CCC-) went out over 2 points better on the week.

Altice’s 5¾% senior secured notes due 2029 (B3/B) were trading over 3 points lower from Monday.

DISH DBS Corp.’s distressed paper mostly quieted Friday with the 5 7/8% notes due Nov. 15, 2024 (Caa1/CCC) the most active and its credit default swaps spreads wider on the week.

The 5 7/8% notes were quoted over 1 point lower on the week.

DISH DBS’s CDS spreads widened more than 100 basis points this week, while CDS spreads from DISH Network Corp. eased over 80 bps.

Altice USA, Inc. subsidiary CSC Holdings, LLC’s CDS spreads also widened over 80 bps this week.

Market tone

Meanwhile, even an earthquake that struck the New York and New Jersey area failed to distract from the strong jobs report Friday and slimming chances of a June rate cut.

New York traders carried on after a 4.8 magnitude earthquake startled the region as the morning got underway.

“It’s been pretty quiet,” a trader noted.

Overall market tone was strong over the session after shaking off Thursday’s losses.

The S&P 500 index, down 1.23% the previous day, closed up 1.11%.

Treasury yields also climbed. The benchmark 10-year Treasury note yield rose 6 basis points to 4.38%.

The iShares iBoxx High Yield Corporate Bond ETF was flat to down 1 cent in early trading and slipped 7 cents on the day after dropping 6 cents on Thursday.

The CBOE Volatility Index, up 14.1% Thursday, pulled back nearly 2% Friday to 16.03.

West Texas Intermediate crude oil benchmark futures for May delivery also continued to climb Friday after settling Thursday $1.16 higher. Futures closed Friday 32 cents higher at $86.91 a barrel.

The Labor Department reported Friday that total nonfarm payroll employment rose by a seasonally adjusted 303,000 in March, while the unemployment rate declined to a seasonally adjusted 3.8% from 3.9% in February.

The job gains came higher than the 214,000 economists had expected and stronger than the revised 270,000 increase in February, while the unemployment rate was in line with forecasts.

The unemployment rate has been in a narrow range of 3.7% to 3.9% since August 2023, the Labor Department said.

The data was a “double-edged sword,” a source said.

“The number wasn’t great this morning for rate cuts, so it started slipping but everything stabilized by late afternoon,” the source reported. “Short covering helped the market a bit.”

Focus is widely turning toward the March Consumer Price Index inflation data that will be released next week.

BNP Paribas economists reported they expect core CPI to tick down to 0.3% from 0.4% in the prior month, with another month of higher gasoline prices keeping headline CPI inflation at 0.4%.

“After two strong inflation prints to start the year, we think March will begin a string of relatively more moderate price gains,” BNP said.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said in a note Friday the strong jobs data makes the fight against inflation more difficult but also “puts a potential pin in hopes for an interest rate cut in June.”

“It's been a week of mixed messages from the Federal Reserve, where cuts are very much still on the table for the year, but policymakers won’t be drawn into giving any guarantees,” she said. “Some corners of the market think cuts could be delayed until 2025, and it’s certainly true that a run of weaker economic data will be needed for these to happen.”

Canacol paper lower

Back to single distressed names, Canacol’s 5¾ senior notes due 2028 (Caa1/BB-/B) were closing the day at 41 bid, 42 offered on nearly $10 million of secondary action in one of the day’s busier issues, a source reported.

The bonds were ending the week lower. The issue was quoted trading Monday at 44 bid, 45 offered.

Moody’s on Thursday downgraded the notes to Caa1 from B1, reflecting liquidity risk and growing refinancing risk.

Moody’s said Canacol’s $200 million revolver was fully drawn at the end of 2023 and the company’s reserves have declined for three consecutive years.

Canacol addressed concerns on its debt obligations in March and said it is in compliance with all of its debt covenants.

“Any speculation that the corporation may not be paying its next coupon is completely false and Canacol reaffirms its commitment to meet all its future financial obligations,” according to the March 26 statement.

Canacol announced March 21 that it has discontinued its quarterly dividend, which will increase balance sheet flexibility and short-term cash liquidity.

Based on natural gas market dynamics in Colombia that include gas scarcity and limited options to import gas, the corporation expects to generate between $250 million to $290 million in EBITDA during 2024, which is between 6% and 22% higher than 2023’s EBITDA.

The Calgary, Alta.-based gas and exploration company operates mainly in Colombia.

Altice paper mixed

Altice France Holding’ 10½% senior notes due 2027 (Ca/CCC-) went out Friday at 38½ bid, 39½ offered on more than $11 million of paper traded, a source said.

The notes were ending the week slightly better from where the issue traded Monday at 36 bid, 37 offered.

Altice Financing SA’s 5¾% senior secured notes due 2029 (B3/B) had nearly $10 million of supply moving over the session with the bonds down on the week at 76½ bid, 77½ offered.

“They were a little higher on Monday at 80, 81,” the source said.

The company’s bonds have been pressured since Altice France in March lowered its guidance and highlighted potential haircuts for debt holders in order to reduce leverage.

The Paris-based telecommunications company’s 10½% notes slid from a handle in the 70s after Altice announced March 20 weaker quarterly results and following reports the company hired financial and legal advisors.

Altice USA, Inc. subsidiary CSC Holdings’ bonds and CDS spreads also have softened in the aftermath.

The company’s CDS spreads eased 81 bps to 1,815 bps for the week ended Wednesday, according to a Moody’s report.

DISH weakens

DISH’s 5 7/8% notes due Nov. 15, 2024 (Caa1/CCC) were quoted Friday at 94 bid, 95 offered, down from 95¼ bid, 96¼ offered on Monday, a source said.

DISH DBS CDS spreads also widened 104 bps over the week ended Wednesday to 2,996 bps, according to a Moody’s report.

DISH Network’s CDS spreads eased 88 bps to 2,531 bps for the week.

Parent EchoStar Corp. reported heavy fiscal 2023 losses in February following failed DISH bond exchange offers for four tranches of notes in January and two tranches of convertible bonds in February.

EchoStar is seeking funding to cover $1.98 billion of debt that matures in November.

The Englewood, Colo.-based satellite owner owns companies that include DISH, HughesNet, Boost Mobile and Sling TV.

Distressed returns gain

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns moved back into positive territory for the first time in April on Thursday.

Returns were 0.39%, up from negative 0.15% on Wednesday, negative 0.78% on Tuesday and negative 0.39% on Monday.

Month-to-date total return losses narrowed to minus 0.93% from negative 1.31% midweek, negative 1.17% on Tuesday and negative 0.39% on Monday.

Year-to-date total returns were 1.18% Thursday, compared to 0.79% on Wednesday, 0.94% on Tuesday and 1.73% at the start of the week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.