National Enquirer Owner Invites Default Talk

Just two years after emerging from bankruptcy, the publisher of the National Enquirer is being abandoned in the bond market on concern that competition will push it back into default.

American Media’s $470 million face value of bonds have lost 3 percent of their value this month, the worst performance among distressed issuers, according to BAML index data. S&P downgraded the company owned by Evercore one level to B- with a negative outlook last week as cost cuts and higher prices haven’t compensated for lower sales.

After emerging from a prepackaged bankruptcy in December 2010 that cut its debt from $1.23 billion, the company may struggle with its $494 million in remaining obligations that carry higher interest costs, according to S&P. The weighted average coupon on the company’s debt has increased to 11.95 percent from 8.88 percent in the fourth quarter of 2009.

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