Secondary action dominated by Twitter, Carvana; Carvana paper declines; Exela softens

By Cristal Cody

Tupelo, Miss., April 26 – A few distressed names were seen in secondary bond trading on Tuesday in a session dominated by Twitter bonds trading higher off Elon Musk’s $44 billion purchase that will take the company private.

Carvana Co.’s existing paper also traded heavily in the secondary space over the day as the online car retailer brings a new debt offering.

Carvana’s notes were down about 7/8 point to 1 3/8 points on handles in the mid to low 70s and 80s and yields hovering over 9%, a source said.

Trading action in distressed energy paper stayed light as oil prices recovered from losses on Monday, according to market sources.

The day’s tone was weak with measured volatility soaring over 24% and stock indices sliding over 2%.

The Chicago Board Options Exchange’s CBOE Volatility index climbed 24.06% to 33.52.

The iShares iBoxx High Yield Corporate Bond ETF fell 47 cents on the day to $79.46.

In other distressed paper active on Tuesday, Exela Technologies, Inc.’s 11½% first priority senior secured notes due 2026 (Caa3/CCC-) declined 1 point.

Exela’s paper has dropped about 9 points since the start of the month.

Distressed bond returns remained soft at the start of the last week of April with the S&P U.S. High Yield Corporate Distressed Bond index down again on Monday.

Carvana declines

Carvana’s 4 7/8% senior notes due 2029 (Caa2/CCC+) declined 1 3/8 points to hit 76¾ bid with $20 million of notes changing hands, a source said.

The company’s 5½% senior notes due 2027 (Caa2/CCC+) also traded down 1 point to 83 bid on $17 million of secondary action on Tuesday.

Carvana was marketing $2.275 billion of eight-year senior notes (Caa2/CCC+) that were talked to price at the 10% to 10½% area.

The Phoenix-based online car retailer on Friday priced an upsized $1.25 billion offering of class A common stock.

The debt and equity deals follow the company’s first-quarter loss reported on Wednesday.

Carvana plans to acquire the Adesa U.S. Physical Auction business from KAR Global for $2.2 billion in a transaction scheduled to close in May.

Exela softens

Exela Technologies’ 11½% first priority senior secured notes due 2026 (Caa3/CCC-) were quoted down 1 point at 39¼ bid on light trading volume totaling $2 million on Tuesday, a source said.

The bonds have dropped from trading at 48¼ bid at the start of the month.

Exela announced earlier in April an exchange offer for up to 100 million shares of its common stock for a new class of 6% series B1 convertible preferred stock. The tender offer expires May 16.

The company’s leadership is set to change in May from longtime chief executive officer Ronald Cogburn to executive chairman Par Chadha and the global senior management team at Exela.

In March, the Irving, Tex.-based software and services company closed on a $100 million revolving loan exchange and prepayment agreement that included prepaying $50 million under the revolving facility and exchanging $50 million of its 11½% notes due 2026.

Distressed returns weak

S&P U.S. High Yield Corporate Distressed Bond index returns remained weak on Monday.

One-day total returns were minus 0.52%, down from minus 0.39% on Friday and 0.44% in the same session a week ago.

Month-to-date total returns slid to minus 2% as the last week of April kicked off, compared to minus 1.48% ahead of the weekend and minus 1.37% in the week-ago session.

Year-to-date index returns were lower on Monday at minus 7.21% versus minus 6.72% on Friday and minus 6.61% last week.

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