Below are details of a High Yield bond issued by the DISH Network (NASDAQ:DISH). As part of Bondsquawk's High Yield Portfolio released earlier, this bond offers an investor an opportunity to capture high income.
DISH Network Corporation (CUSIP 25470XAB1)
7.875% Fixed Coupon Paid Semi-Annual basis
September 1, 2019 Maturity Date
Current Market: Offered at $120.38, Yield to Worst of 4.33% according to Trade Monster's Bond Trading Center
+251 basis points Yield Advantage over comparable maturity U.S. Treasury (On the run 10-Year)
$118.50 Dollar Price, 4.64% Yield to Worst at time of inclusion of Bondsquawk's High Yield Portfolio
'BB-' Rating by Standard & Poor's which falls on the High Yield spectrum
DISH Network Corp. is an American satellite broadcaster, providing direct broadcast service to more than 14 million subscribers across the United States. The company is the nation's third largest pay-TV provider and second-largest direct broadcast satellite TV provider behind DIRECTV (NASDAQ:DTV). DISH offers 280 basic video channels, 60 Sirius radio channels, 30 premium movie channels, 35 regional sports channels, 2,500 local channels (offered in each sub's respective market), and 50 channels of pay-per-view content. The DISH Network has more than 34,000 employees and is headquartered in Meridian, Colorado.
Low Leverage: While total debt for DISH increased by $2.0 billion from a year ago to $10.4 billion as of the Third Quarter 2012, the company's leverage when accounting for its cash on hand, has declined. The Net Debt (which is Total Debt less Cash Balances) to its EBITDA ratio has fallen from 1.40x in Third Quarter 2011 to 1.26 as of the latest statements.
This low level of leverage compares favorably to DISH's competitors in the Media & Entertainment sector which is significantly higher. The Net Debt to EBITDA ratio for Cablevision Systems (Ticker: CVC, rated 'BB+') and Charter Communications (Ticker: CHTR, rated 'BB-) stands at 4.87x and 4.86x, respectively.
Increasing Cash and Free Cash Flow: DISH's Cash Balance increased during that time from $1.0 billion to just under $3.1 billion. Furthermore, the company's Free Cash Flow for the past 12 months increased by 8% to $1.7 billion from a year ago.
Profitable and Current: DISH is easily able to stay current and pay its interest payment obligations from its debt as evident by its Interest Coverage ratio. While it has fallen from the 6.5x posted a year ago, the EBITDA to Interest Expense ratio using the past year's worth of data for DISH remains at a healthy 5.8x. A higher Interest Coverage Ratio implies better credit health since it is making enough money to stay current with its debt interest obligations. Conversely, a red flag is raised when this ratio approaches 1.5 or lower since its ability to pay the interest on its debt is questionable.
Comparatively, competitor CHTR has an Interest Coverage ratio of just 2.8x while CVC's stands at just under 3.0x.
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