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DISH’s bonds dropped by 2-5 points as its parent EchoStar Corp. proposed swapping $5bn of debt due in the coming years for new notes. This is the second such offer in less than a week, after it launched an exchange offer for $4.9bn of its convertible debt last Friday. According to the exchange offer, the DISH’s existing notes will be replaced by new bonds carrying a 10% coupon with an amount outstanding of not more than $3bn. The tender deadline has been set to February 12 and the early exchange deadline has been set to January 29 with an early tender premium of $50. The terms of the debt exchange including the early tender premium are as follows:
As a consequence, S&P downgraded the credit ratings on Dish Network Corp. and Dish DBS Corp. to CC from CCC+. It also downgraded their debt to CC as it viewed the debt exchange equivalent to a default. The outlook on both the entities has been kept negative with the possibility of downgrading to ‘SD’ on the completion of debt exchange exercise.
DISH bonds were among the top losers with its 5.75% 2028s dropping 5 points to 61.5 cents on the dollar.