CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were $0.4 billion and year to date flows stand at -$5.6 billion. New issuance for the week was $6.8 billion and year to date HY is at $157 billion.

(MarketWatch) AMC hits record low as unrelentingly poor box office continues to take a toll

• AMC said on Tuesday that not only would the company swing to a loss in the quarter, but that it would be wider than analysts surveyed by FactSet were expecting.
• Analysts have, for the most part, stayed positive on the film exhibitor group, as box office revenues have suffered so far this year. While investors clearly don’t like the news, analysts believe that this too will pass.
• So far in the year, box office revenue is down 2% compared with the same point last year.
• “[Our] fundamental view is unchanged, but the stock is likely in the penalty box,” RBC analyst Leo Kulp wrote in a note to investors. “The news does not change our fundamental view given our already low expectations around the second quarter. With higher costs and a weaker third-quarter box office outlook now baked in as well as a positive outlook on the 2018 box office, we believe we could be near a bottoming out.”

(DSL Reports) Frontier Communications Loses Another 101,000 Frustrated DSL Users

• Frontier continues to lose DSL customers frustrated by the company’s high prices and slow broadband speeds. Frontier’s latest earnings report indicates that the company lost another 101,000 DSL customers last quarter, thanks in large part to users fleeing to cable or wireless services that offer dramatically faster connectivity. Customers in Florida, Texas and California are also still fleeing the ISP due to its bungled acquisition of Verizon’s unwanted DSL and FiOS customers in those states.
• Frontier CEO Dan McCarthy tried to put a positive spin on the company’s problems with the acquisition, its outdated speeds, and the ongoing defections.
• “We’re back in the market with new offers, slightly higher speeds, and we feel pretty good about that,” McCarthy said. “Those offers launch really this week, and we’re expecting to see continued voluntarily churn reduction, as well as an uptick in gross adds, and the combination of the two is where we see improvements in net as we get into this quarter.”
• But that statement tries to obfuscate that many Frontier customers are leaving because the company still refuses to upgrade older DSL lines at any real scale, leaving many users on 3-6 Mbps DSL that falls well below the base definition of 25 Mbps. Cable providers have been having a field day in these markets as DOCSIS 3.1 now allows them to offer gigabit speeds for relatively little investment.

(24/7 Wall St.) More Upside Seen for Cell Tower Giants Ahead of 5G Deployments

• If there is one part of the communications industry that many consumers tend to overlook, it is the cell and communications tower operators. At least until they lose their signal. SBA Communications Corp. reported mixed earnings that looked a bit softer than expected, but analysts by and large call for more upside in SBA and from its two top rivals.
• Jeffrey Stoops, president and CEO of SBA Communications, talked up the spending climate ahead of spectrum and 5G deployments in the quarters and years ahead.
  “With substantial spectrum and 5G deployments on the horizon in both the U.S. and internationally, we expect customer demand to remain solid for years to come. Against that demand, we intend to continue to execute well and we expect to continue to favor allocating capital to portfolio growth and stock repurchases. We continue to remain on track to achieve our long term goal of $10 or more of AFFO per share in 2020.”

(CNBC) Sprint swings to a profit, helped by cost cuts

• Sprint on Tuesday swung to a quarterly profit for the first time in three years and its chief executive said an announcement on merger talks should come in the “near future.”
• Sprint is in the middle of a turnaround plan and has sought to strengthen its balance sheet to compete in a saturated market for wireless service.
• While Sprint has cut costs, analysts say the company is highly leveraged. And although its customer base has expanded under Chief Executive Marcelo Claure, growth has been driven by heavy discounting.
• On the company’s post-earnings conference call, Claure said that while Sprint could sustain itself on its own, the synergies that could come with a transaction were significantly better than remaining a standalone entity.
• “We have plenty of options, and we’ve had discussions with a lot of different parties,” he said.
• He said he was surprised Charter said it was not interested in acquiring Sprint given Sprint was never offered for Charter to buy. Rather, he said, it was part of the “bigger play that has been reported.”
• “Everybody has shown a high level of interest in evaluating Sprint as a potential merger partner. We’re very encouraged by the results of our conversations,” Claure later told reporters.