Diamond Sports soft; Kaisa, China Evergrande weakens; Endo, Mallinckrodt, Air Methods up

By Cristal Cody

Tupelo, Miss., Nov. 4 – Diamond Sports Group LLC’s bonds mostly sank in heavy secondary trading Thursday a day after parent Sinclair Broadcast Group Inc. reported third-quarter results and announced that it had been hit by hackers with ransomware.

The company’s notes due 2027 (Ca/CC) fell 1½ points after going out Wednesday down 3¼ points.

Market tone in the junk space mostly improved Thursday following the Federal Reserve’s tapering announcement the prior session, while oil sank below $80.

The iShares iBoxx High Yield Corporate Bond ETF closed up 23 cents at $87.17.

West Texas Intermediate crude oil benchmark futures for December deliveries slid $2.05 to settle at $78.81 a barrel after declining $3.05 on Wednesday.

Elsewhere, Kaisa Group Holdings Ltd.’s bonds declined about 3¼ points to over 8 points Thursday as the paper moves further into the distressed space.

Paper from China-based property developers has plunged as contagion fears spread through the sector following China Evergrande Group’s missed bond payment in September and missed bond payments from Fantasia Holdings Group Co. Ltd. and Modern Land (China) Co., Ltd. in October.

China Evergrande Group’s 8¾% senior notes due 2025 (C/C/C) were about 1½ points weaker over the day.

Bonds in the health care space ticked higher Thursday.

Endo International plc’s notes are trading about 7 points better on the week after the company announced Tuesday that a California state court ruled in its favor in an opioid-related lawsuit, lifting other pharmaceutical companies facing claims.

Mallinckrodt plc’s notes jumped 3 points to 5¼ points on Thursday.

Air Methods Corp.’s notes also were on the move during the session with the paper nearly 5¾ points better.

Diamond Sports mixed

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) traded as low as 49¾ bid early Thursday before improving to head out 1¼ points better at 52½ bid, a source said.

Secondary volume was heavy with $33 million of notes traded.

The secured notes recovered slightly after dropping 4¾ points on Wednesday.

The notes have declined about 4½ points week to date.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) traded as low as 22½ bid over the day after going out Wednesday down 3¼ points at 26 bid.

The notes finished Thursday about 1½ points softer at 24½ bid on over $18 million of bonds traded.

The unsecured notes are about 5½ points lower on the week.

On Wednesday, parent Sinclair reported third-quarter profits of $1.5 billion were down 0.3% from the same period last year.

Net income improved to $19 million versus a net loss of $3.26 billion in the year-ago period.

The company’s total debt as of Sept. 30 was $12.53 billion, which includes $8.12 billion of debt from Diamond Sports.

Sinclair also announced Wednesday that on Oct. 17 it identified that certain company servers and workstations were encrypted with ransomware, some of its office and operational networks were disrupted due to the ransomware, and there were indications that data was taken from its network.

Sinclair said it has taken steps, including engaging legal counsel and a cybersecurity forensic firm, but the “event has not yet been fully resolved” and certain disruptions to operations continues.

In October, Sinclair reported it is continuing to seek new funding for its Chesapeake, Va.-based sports broadcast group unit.

Kaisa notes weaken

Kaisa Group’s notes dropped about 3¼ points to over 8 points Thursday as the company faces a $400 million bond payment due in December, a source said.

Kaisa’s 10 7/8% senior notes due 2023 (Caa2//CCC+) fell 4¾ points to 27¼ bid by the close.

The issue saw $6 million of trading action.

The notes ended the prior week down about 15 points.

The Shenzhen, China-based real estate developer was downgraded in the prior week by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings over concerns about the company’s ability to refinance debt, including $400 million of dollar notes due Dec. 7.

Evergrande softens

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) were about 1½ points weaker at 25½ bid on Thursday, a source said.

The notes are mostly unchanged from where the issue ended the prior week.

The Shenzhen, Guangdong Province, China-based real estate developer’s paper improved the previous week after Evergrande made a second bond payment that staved off a default.

Endo notes stronger

Distressed pharmaceutical issuers remained stronger Thursday with Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) over 1¾ points higher at 76¾ bid on $3 million of volume, a source said.

Endo’s notes are trading about 7 points better since the company announced Tuesday that a California state trial ruled that its subsidiaries are not liable for opioid-related claims.

The Dublin-based pharmaceuticals maker reportedly settled an Alabama lawsuit in October, as well as reached agreements to settle opioid-related lawsuits in Louisiana and New York in September and in Tennessee in July.

Mallinckrodt rallies

Bankrupt pharmaceuticals maker Mallinckrodt’s notes jumped 3 points to 5¼ points on Thursday, a source said.

The company’s 5¾% notes due 2022 soared 5¼ points to 53¼ bid.

Secondary supply totaled $4 million.

The notes were 1 3/8 points better on Wednesday after gaining 3 7/8 points on Tuesday.

Mallinckrodt (D) faces opioid-related lawsuits that are moving through bankruptcy court.

The Dublin- and St. Louis-based company filed for Chapter 11 on Oct. 12, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

Air Methods gains

In the health care services space, ASP AMC Holdings Inc.’s notes climbed higher during the session, a source said.

Subsidiaries Air Methods’ and ASP AMC Merger Sub Inc.’s 8% senior notes due 2025 (Caa3/CCC) jumped nearly 5¾ points to 84¼ bid on $3 million of notes traded.

The New York-based ambulance service provider’s bonds were under pressure in October after starting the month at 94½ bid and ending it at 76½ bid.

Distressed index down

Distressed index returns slid on Wednesday.

The S&P U.S. High Yield Corporate Distressed Bond Index’s one-day total return dropped to negative-0.7% from a positive-0.23% on Tuesday and from negative-0.05% on Monday.

Month-to-date total returns fell to negative-0.52% Wednesday from 0.18% on Tuesday and negative-0.05% at the start of the week.

Year-to-date total returns declined to 28.36% versus 29.26% on Tuesday and 28.97% on Monday.

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