Secondary weakens; CSC Holdings hits new low; Tegna lower on acquisition delay

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 19 – The high-yield primary market remained quiet as what is expected to be the final week for possible new issuance in 2022 got underway, sources said.

No deals priced.

No deals were announced.

The active new issue calendar remained empty at Monday's close.

The new issue bourse is unlikely to resume operations before the new year, market sources say.

Meanwhile, the secondary space continued to weaken on Monday with the Federal Open Market Committee’s final meeting of December 2022 dashing hope for the dovish pivot that drove market rallies throughout the year.

While the market opened Monday unchanged, selling pressure set in midway through the session with cash bonds down another 3/8 point by Monday’s close.

However, liquidity continued to dry up in the secondary space as the market entered into the final days of the year.

Altice USA Inc. subsidiary CSC Holdings LLC’s junk bonds hit a new low on Monday with the notes incurring heavy losses since its parent company abandoned a planned asset sale in early December.

Tegna Inc.’s 5% senior notes due 2029 (Ba3/BB) were weaker in active trade with Standard General LP’s acquisition of the company still under regulatory review.

CSC’s new low

CSC Holdings junk bonds hit a new low on Monday with the notes seeing heavy losses since parent company Altice USA abandoned the sale of its Suddenlink business.

CSC’s 7½% senior notes due 2028 (Caa1/B-) were the most actively traded tranche in the capital structure and one of the most actively traded notes in the secondary space.

The 7½% notes were off 1¾ point to close the day at 69¼ bid, 69¾ offered, a source said.

The yield was about 16 3/8%.

There was $18 million in reported volume.

The notes were on a 78-handle heading into December.

CSC Holdings 5½% senior guaranteed notes due 2027 (B1/B+) were also down about 1¾ points with the notes closing Monday at 87 bid, 87½ offered, a source said.

The yield was about 9¼%.

The 5% senior notes due 2031 were off 2 points to close the day at 57¾ bid, 58¼ offered with a yield of about 13¼%.

The notes were on a 63-handle heading into December.

CSC Holdings has been on a strong downtrend since Altice USA announced it would not pursue the sale of its Suddenlink business.

The sale could have netted the company $20 billion which could have been used to pay down debt, sources said.

Moody’s Investors Service downgraded CSC Holdings guaranteed notes to B1 from Ba3 and unsecured notes to Caa1 from B3 in early December due, in part, to the deterioration of credit metrics such as leverage and free cash flow to debt.

Tegna weaker

Tegna’s 5% senior notes due 2029 were weaker in active trading with Standard General’s acquisition of the company still under regulatory review.

The 5% notes fell about 1 point to a 92-handle.

The notes were changing hands in the 92 to 92½ context throughout the session with the yield about 6 3/8%, a source said.

There was $16 million in reported volume.

The notes were previously on a 93-handle.

The notes were active after Standard General released an update on its pending acquisition of Tegna, which has come under scrutiny from regulators.

Standard General announced that it is waiving certain contractual rights to address regulator concerns.

Standard General announced its $8.6 billion acquisition of Tegna in February.

The deal was expected to close by the end of the fourth quarter, a source said.

Fund flows

The dedicated high-yield bond funds sustained $374 million of net daily cash outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $344 million of outflows on the day.

Actively managed high-yield funds sustained $30 million of outflows on Friday, the source said.

Indexes

The KDP High Yield Daily index fell 17 points to close Monday at 52.45 with the yield 7.24%.

The index posted a cumulative gain of 18 points on the week last week.

The ICE BofAML US High Yield index was down 28.5 basis points with the year-to-date return now negative 10.237%.

The CDX High Yield 30 index 29 bps to close Monday at 100.14.

The index posted a cumulative loss of 36 bps on the week last week.

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