Party City notes rise; Rite Aid improves; Qurate Retail widens; Embarq notes soften

By Cristal Cody

Tupelo, Miss., Jan. 19 – Party City Holdings Inc.’s 8¾% senior secured notes due 2026 (Caa3/D/C) added 2 points in mostly light secondary action on Thursday as the market absorbs the company’s Chapter 11 bankruptcy filing earlier in the week.

Distressed bonds from Rite Aid Corp., Embarq Corp. and Qurate Retail Inc. are moving in the secondary market this week, along with the companies’ credit default swap spreads.

Rite Aid’s CDS spreads were sitting at just under 5,000 basis points in the prior week before improving this week by more than 200 bps.

The drug retailer’s paper also is trading about 2 points stronger this week.

CDS spreads from Qurate Retail, formerly known as Liberty Interactive Corp., widened 85 bps over the past week ended Wednesday.

The home shopping network owner’s CDS spreads have moved out 800 bps from just over a month ago.

Qurate Retail’s 8½% senior debentures due 2029 (B3/CCC) dropped more than 2 points over the session but were little changed from December.

Embarq’s 7.995% notes due 2036 (Caa2/CCC/CCC) have moved about 5 points higher this month, while its CDS spreads hit 1,000 bps after softening this week.

Stocks were down a second day. The S&P 500 declined 0.76% on Thursday.

The iShares iBoxx High Yield Corporate Bond ETF fell 45 cents, or 0.59%, to $76.02.

Volatility was up marginally with the CBOE Volatility index 0.59% higher at $20.46.

The New York Federal Reserve said Thursday that its weekly economic index increased to a preliminary estimate of 1.22% for the week of Jan. 14 from 0.88% in the week of Jan. 7. Gains were attributed to increases in consumer confidence and railroad traffic, “which more than offset declines in retail sales, steel production, and tax withholding and an increase in initial unemployment claims,” the agency said.

Party City higher

Party City’s 8¾% senior secured notes due 2026 (Caa3/D/C) rose 2 points to head out at 21¼ bid on Thursday, a source reported.

Trading was light on $2.7 million of volume.

On Wednesday, Party City’s 8¾% notes were quoted at 19¼ bid on $3.19 million of volume.

Parent Party City Holdco Inc. and some of its subsidiaries filed for Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas.

Both S&P Global Ratings and Fitch Ratings downgraded the Woodcliff, N.J.-based party goods retailer on Thursday.

Rite Aid improves

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/CCC) were moving about 2 points better this week at the 51½ bid range, a source said.

Rite Aid’s CDS spreads also improved over the past week and tightened 233 bps after widening 634 bps for the week ended Jan. 11, a Moody’s Investors Service report said Thursday.

Rite Aid’s CDS spreads tightened 233 bps over the week ended Wednesday to 4,720 bps, Moody’s said.

The Camp Hill, Pa.-based drug retailer completed a cash tender offer in December for up to $200 million of its 7½% senior secured notes due 2025 (B3/CCC-/CCC).

Qurate declines

Qurate Retail’s 8½% senior debentures due 2029 (B3/CCC) were little changed from December and trading with a low 50s handle, while the company’s CDS spreads have moved out, sources said Thursday.

The notes traded about 2½ points lower on Thursday with a 50 handle on $2.65 million of volume.

The home shopping network owner’s CDS spreads widened 85 bps to 2,510 bps over the past week ended Wednesday, Moody’s said.

CDS spreads in the West Chester, Pa.-based home shopping network issuer have gapped out 800 bps since the end of November.

Embarq, Lumen soft

Embarq’s 7.995% notes due 2036 (Caa2/CCC/CCC) were quoted remaining stronger this week on a 52 handle, up from where the issue was last seen in mid-December at 47 bid, a source said.

Meanwhile, the company’s CDS spreads softened 23 bps in the past week ended Wednesday to 1,000 bps, according to Moody’s.

The Overland Park, Kan.-based telecommunications company was acquired in 2022 by Connect Holding II LLC, doing business as Brightspeed, from Lumen Technologies, Inc.

Lumen’s CDS spreads also eased 18 bps in the week ended Wednesday to 804 bps, Moody’s said.

Distressed index improves

S&P U.S. High Yield Corporate Distressed Bond index one-day returns rose to 0.52% on Wednesday from 0.28% in the holiday-shortened week’s first session.

Month-, quarter- and year-to-date total returns improved to 7.74% mid-week from 7.18% on Tuesday.

One-year returns narrowed to minus 20.81% on Wednesday from minus 21.48% in the prior session.

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