Talen bonds, CDS spreads on rebound; Rite Aid paper under pressure; Envision Health drops

By Cristal Cody

Tupelo, Miss., April 7 – Talen Energy Supply LLC’s bonds are trading about 10 points better this week, while its credit default swaps spreads also have come in nearly 8,000 basis points.

Talen’s notes went out Thursday about ½ point to 1¾ points higher.

Rite Aid Corp.’s bonds were about 4 points to 4 5/8 points weaker in heavy activity Thursday, and its CDS spreads also widened over 300 bps this week.

In other distressed trading, Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Ca/CC) slid 3 5/8 points Thursday as the health care company remains under pressure following a downgrade at the start of the week.

The iShares iBoxx High Yield Corporate Bond ETF stayed soft Thursday but moved off of stronger losses on Tuesday and Wednesday. The ETF finished 13 cents lower at $80.73 after declining $1.07 on Tuesday and 64 cents on Wednesday.

Oil was soft but little changed after heavy declines in the prior session.

West Texas Intermediate crude oil benchmark futures for May delivery, which climbed $4.01 Monday and declined $1.32 on Tuesday and $5.73 on Wednesday, settled 20 cents lower at $96.03 a barrel.

S&P Global Ratings said in a report on Wednesday that corporate CCC issuance to date has dropped 84% to $7.5 billion from the same time period last year as CCC-rated issuers “are the most exposed to potential refinancing risks from tightening credit conditions.”

The number of CCC ratings on U.S. and Canadian issuers was steady at 135 in March, S&P said.

Talen improves

Talen’s bonds remained on the mend Thursday after sinking to the low 20s in the prior week, sources reported Thursday.

Talen’s 6½% senior notes due 2025 (Caa2/CCC/CCC) traded 1¾ points better at 33¼ bid. The issue saw $5 million of secondary supply.

The notes have recovered from ending the prior week at 23½ bid.

Talen’s 10½% senior notes due 2026 (Caa2/CCC/CCC) were up ½ point Thursday at 33½ bid.

The 2026 issue has climbed 9¾ points this week.

Talen’s bonds sank last week, and its CDS spreads widened more than 5,200 bps, while reports circulated that the company is in potential restructuring talks.

The Woodlands, Tex. and Allentown, Pa.-based power generation and infrastructure company’s CDS spreads came in over 7,800 bps for the past week ended Wednesday to 8,103 bps.

Rite Aid softens

Rite Aid’s bonds were under pressure Thursday with the paper down about 4 points to 4 5/8 points, while its CDS spreads also widened this week, sources said.

The 8% senior secured notes due 2026 (B3/CCC/BB-) dropped over 4 points in strong trading totaling $17 million to a print of 86.81.

The issue has softened more than 6 points this week.

Rite Aid’s 7½% senior secured notes due 2025 (B3/CCC/BB-) dropped 4 5/8 points to 86 7/8 bid on $8 million of secondary action over the day.

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC/CCC) also sank 4¼ points to 71 bid on lighter supply totaling $1 million Thursday.

Rite Aid’s CDS spreads were lower for the week ended Wednesday.

The Camp Hill, Pa.-based drugstore company’s CDS spreads widened 363 bps to 1,716 bps.

Envision declines

Meanwhile, Envision Healthcare’s 8¾% senior notes due 2026 (Ca/CC) slid 3 5/8 points Thursday to 41 3/8 bid, a market source said.

Secondary trading was active with $4 million of volume in the issue.

The bonds have declined from trading at the 52¼ bid range in late February.

S&P downgraded the Nashville-based health care company and hospital-based physician group on Monday following Envision’s notice to lenders that it had not met requirements to provide financial data within 90 days of its 2021 year end.

S&P said it believes the company will be unable to repay $700 million of debt due in October 2023 unless it refinances or extends the maturity, making it likely to conduct a distressed exchange offer or redemption in the next year.

Distressed index lower

The S&P U.S. High Yield Corporate Distressed Bond Index one-day total return declined to minus 0.58% on Wednesday from minus 0.1% on Tuesday and 0.41% on Monday.

Month-to-date total returns softened to minus 0.27% from 0.31% on Tuesday and 0.41% in Monday’s session.

Year-to-date index returns were weaker Wednesday at minus 5.57% versus minus 5.02% on Tuesday and minus 4.93% at the start of the week.

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