Washington Prime better; Diamond Sports, Frontier, Hertz, Exela, AMC up; Transocean slips

By Cristal Cody

Tupelo, Miss., March 9 – Washington Prime Group, LP’s 6.45% notes due 2024 (C/C/C) improved in heavy trading on Tuesday but remained weak as the company nears the 30-day default deadline on a missed interest payment.

The 6.45% notes due 2024 (C/C/C) were last seen up nearly ¾ point at 55¼ bid on more than $16.75 million of trading volume, a source said.

The notes have softened from where the issue traded in the 73½ bid range on Feb. 12 before Washington Prime Group, Inc. announced in an 8-K filing with the Securities and Exchange Commission that the operating partnership withheld a $23.2 million interest payment on the notes that was due Feb. 15.

If the payment issue is not resolved within 30 days, the missed payment constitutes a default.

Washington Prime said in the filing that if an event of default occurs, the trustee or the holders of at least 25% of the notes could accelerate the outstanding debt due under the notes, making such debt due and payable, and would result in a cross-default with some of the limited partnership’s or the company’s other debt.

The Columbus, Ohio-based shopping center real estate investment trust’s stock has fallen from $12.06 before the announcement to trading Tuesday at $3.39 a share.

Diamond Sports gains

In other distressed secondary trading, Diamond Sports Group LLC’s bonds were up after slipping Monday following a downgrade by Moody’s Investors Service, a source said.

Diamond Sport’s 6 5/8% senior notes due 2027 (Caa2/CCC-) climbed 4¼ points to 55½ bid.

The company’s 5 3/8% senior secured notes due 2026 (B2/CCC+) jumped more than 3 points to just under 71 bid after heading out flat in the prior session.

The bonds had weakened after parent company Sinclair Broadcast Group, Inc. reported in February soft guidance for the sports broadcast group and an interest in liability management initiatives that could include a debt exchange or redemption.

On Monday, Moody’s cited a negative outlook for the issuer over uncertainty surrounding renewing carriage contracts with DISH, Hulu and YouTube.

Frontier notes better

Paper from bankrupt telecommunications firm Frontier Communications Corp. continued to improve in heavy secondary trading on Tuesday as the company moves toward exiting Chapter 11 bankruptcy early in 2021, a source said.

The company’s 10½% notes due 2022 rose 1 point to 61¼ bid.

Frontier’s 7 5/8% notes due 2024 climbed to 59¾ bid late afternoon after trading up 1 point to 56¾ bid in the prior session.

The company reported last week in its 10-K filing with the Securities and Exchange Commission that it intends to eliminate about $11 billion of debt from its balance sheet at the bankruptcy exit.

Frontier filed for Chapter 11 in April 2020 in the U.S. Bankruptcy Court for the Southern District of New York.

Hertz trades higher

Hertz Corp.’s notes also ticked higher in secondary trading as the company edges closer to exiting Chapter 11 bankruptcy this year, a source reported Tuesday.

Hertz’s 5½% notes due 2024 traded up 1 point at 82¼ bid by the close after gaining 1¼ points over Monday’s session.

In the previous week, the car rental operator filed a joint Chapter 11 bankruptcy plan of reorganization and reported it received a $4.2 billion buyout offer from Knighthead Capital Management, LLC and Certares Opportunities LLC.

A hearing on the offer is scheduled for April 16 in the U.S. Bankruptcy Court for the District of Delaware.

Hertz filed for Chapter 11 bankruptcy in May 2020.

Energy bonds soften

Energy bonds in the distressed space were mixed as oil prices continued to decline for a second day.

Offshore driller Transocean Inc.’s 7½% senior notes due 2026 (Ca) fell 1 point during the session to 65¾ bid, according to a market source.

West Texas intermediate crude oil for May deliveries declined $1.04 to settle the day at $64.01 a barrel.

North Sea Brent crude oil futures for May deliveries settled 72 cents lower at $67.52.

Oil futures soared more than $5 a barrel over the previous week on announced extended production cuts.

Overall market tone was better over the day with stock indices higher.

The iShares iBoxx High Yield Corporate Bond ETF closed up 12 cents, or 0.14%, to $86.11 on Tuesday.

Exela bonds jump

Looking elsewhere in the distressed space, Exela Technologies, Inc.’s paper rallied Tuesday after the company announced securing a new $90 million 10-year contract, according to a market source.

Exela’s 10% senior secured notes due 2023 (Caa3/CCC-) issued by debt financing arm Exela Intermediate LLC added 2 points to trade at 35 bid.

The Irving, Texas-based business process automation company announced Tuesday that it won the contract to manage claims and correspondence for an unnamed major U.S. health insurance company through its PCH Global digital exchange platform.

Exela said in a news release the PCH venture launched in September.

AMC bonds active

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) had heavy secondary trading totaling more than $24 million on Tuesday, a source said.

The notes were quoted more than 1½ points higher on the day at 82½ bid after trading over 2¾ points better on Monday.

The 12% notes started the year at 27 bid.

AMC’s bonds have rallied since January after the company raised additional funding and on the reopening of theaters in March.

The movie theater owner is scheduled to release fourth quarter and year-end earnings results on Wednesday.

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