Sprint Bonds Drop As Its Stock Plunges

By Michael Aneiro

That slide in Sprint's (S) share price today is taking a toll on the company's bonds too. Sprint's disappointing earnings and ongoing subscriber losses have fueled a 16.5% plunge in its stock price at last check. Several Sprint bond issues are posting losses, none more than the company's 6.875% bonds due 2028, which are down 2.94 cents on the dollar today, trading at 93 cents on the dollar and yielding 7.70%, according to online bond trading platform MarketAxess. It's the most actively traded Sprint issue today and the third-most traded bond issue across the high yield market today.

Those bonds were issued as 30-year bonds back in 1998, a decade before Sprint saw its credit ratings cut to speculative grade, as Sprint instantly became one of the largest issuers in the entire junk-bond market. The two biggest high-yield exchange-traded funds, the SPDR Barlcays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), are both are marginally lower today.

My colleague Tiernan Ray took a look at Sprint's earnings this morning:

Sprint cut its outlook for Ebitda this year to a range of $5.8 billion to $5.9 billion, down from a prior forecast of $6.7 billion to $6.9 billion. It said it would reduce capital expenditures this year to less than $6 billion, down from an original forecast of $8 billion or so this year. The company said it plans to reduce headcount by 2,000 to save on annual costs.