Carvana bonds slide; Talen Energy trades higher; Diebold Nixdorf edges up after plunge

By Cristal Cody

Tupelo, Miss., May 11 – Carvana Co.’s paper dropped about 5 points to 6¾ points in heavy secondary trading volume on Wednesday after news reports the online car dealer cut 2,500 jobs.

Carvana’s issue that priced at par in April went out with a handle in the low 80s.

Talen Energy Supply LLC’s bonds continued to improve with the paper up over 4 points after trading higher Tuesday on the heels of its Chapter 11 bankruptcy filing.

Diebold Nixdorf Inc.’s 8½% notes due 2024 (Caa1/CCC-) recovered about 1½ points during the session after plunging over 30 points on Tuesday following the company’s report of first-quarter losses and lower 2022 revenue guidance.

Equities declined and issuers pulled back from the high-grade and junk bond markets on Wednesday as stronger-than-expected inflation data caught investors by surprise, sources said.

The iShares iBoxx High Yield Corporate Bond ETF fell 46 cents to $76.75.

Market volatility was down but remains elevated since the Federal Reserve’s 50 basis point rate hike a week ago.

The Chicago Board Options Exchange’s CBOE Volatility index fell 1.3% to 32.56.

Talen’s bankruptcy helped push up the year-to-date default rate to 0.6% from 0.4%, Fitch Ratings said in a report on Wednesday.

“Talen Energy Supply’s bankruptcy coupled with Service King’s failure to cure a missed interest payment at the beginning of the month produced $3.3 billion of May default volume,” Fitch said. “This follows no default volume last month, marking the seventh time since June 2021 this has occurred. In March, default volume amassed $5.6 billion.”

Service King’s 5 5/8% notes due 2029 (B3/B+) were last seen trading on Tuesday down about 3¾ points month to date.

“Service King was the lone automotive high yield default anticipated for this year and represents the first automotive default since Hertz’s bankruptcy two years ago,” Fitch senior director Eric Rosenthal said in the release Wednesday. “While Cooper-Standard Automotive is forecasted to default in 2023, stagflation could result in additional automotive defaults.”

Cooper-Standard Automotive Inc.’s 5 5/8% senior notes due 2026 (Caa2/CCC) were trading over 6½ points better since Friday.

Meanwhile, Carvana has pushed Fitch’s Market Concern Bonds total to $136.2 billion from $130.9 billion.

“Carvana, despite having completed a transaction late last month, contributed the bulk of this month’s increase,” Fitch said. “The Top Market Concern list comprises just 13% of the Market Concern total even with this month’s addition of Diebold Nixdorf and Cooper-Standard Automotive.”

Carvana notes drop

Carvana’s paper remained under pressure in heavy trading action over the day, a source reported.

The company’s 10¼% notes due 2030 (Caa2/CCC) that priced at par in April dropped 6½ points to 84½ bid on $75 million of paper traded, a source said. The issue was yielding nearly 13½%.

Carvana’s 4 7/8% senior notes due 2029 (Caa2/CCC+) shed 5 points to head out at 64 bid on $21 million of volume.

The Phoenix-based online car retailer’s 5 7/8% notes due 2028 (Caa2/CCC+) also fell 6¾ points on the day to 73¾ bid. Secondary supply totaled $19 million.

Carvana’s job cuts follows the company’s announcement on Tuesday of its $2.2 billion acquisition of a physical auction business.

Talen improves

Talen Energy’s notes picked up over 4 points by the close on Wednesday as the paper continues to improve in the wake of its Chapter 11 bankruptcy filing, a market source said.

Talen’s 10½% senior notes due 2026 (C/D/C) rose about 4 points to the 62 bid range by late afternoon on $6 million of supply.

The notes climbed over 15 points in Tuesday’s session.

Talen’s 6½% senior notes due 2025 (C/D/C) also were quoted 4¾ points better on Wednesday at 62¼ bid.

Volume was strong with $14 million of paper changing hands.

The issue has climbed from the 41 bid range on Monday.

The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company announced on Tuesday that it filed for Chapter 11 bankruptcy.

Fitch downgraded the company to D and dropped the senior notes to C on Wednesday. S&P lowered the issuer to D on Tuesday.

Diebold Nixdorf edges up

Diebold Nixdorf’s 8½% notes due 2024 (Caa1/CCC-) traded about 1½ points better on Wednesday at the 41½ bid area after sinking over 30 points the previous day, a source said.

The notes slid from the 72 bid area on Monday to the 40 bid range on Tuesday.

Diebold Nixdorf’s bonds have softened from the 95 bid area in mid-April.

The Hudson, Ohio-based financial technology company on Tuesday reported a first-quarter loss of $183.9 million, wider than the $127.7 million loss a year ago.

Diebold Nixdorf also released a revised and lower outlook for fiscal 2022 revenue.

S&P downgraded the company on Wednesday, noting a higher probability of a debt restructuring in the next 12 months.

Diebold Nixdorf has hired financial advisers to explore refinancing options for its debt due in 2023 and 2024, S&P said.

Cooper-Standard better

Cooper-Standard’s 5 5/8% senior notes due 2026 (Caa2/CCC) were quoted at a print of 46.86 in thin supply on Wednesday, a source said.

The notes were trading over 6½ points better since Friday.

The issue softened to 39 bid at the start of May.

Cooper-Standard, a Northville, Mich.-based supplier of sealing and fluid handling systems and components, has hired restructuring advisers ahead of debt due in 2023, 2024 and 2026, including $250 million of 13% senior secured notes due 2024 and $400 million of the 5 5/8% notes, according to a Fitch report.

Service King down

Service King’s 5 5/8% notes due 2029 (B3/B+), issued through Midas OpCo Holdings LLC, were last seen trading on Tuesday down less than 1 point at the 87 bid area and yielding over 8% in thin volume, a source said.

The notes were about 3¾ points lower month to date.

S&P Global Ratings downgraded the issuer and the paper in March, citing a strong likelihood of a default or a distressed debt exchange as the company faces at least $241 million of debt to refinance before July 1.

The Richardson, Tex.-based auto body repair provider is majority-owned by Blackstone Group LP.

Distressed returns soft

The S&P U.S. High Yield Corporate Distressed Bond index improved on Tuesday but remained soft month and year to date.

One-day total returns rose to minus 0.93% versus minus 1.41% on Monday.

Month-to-date total returns widened to minus 6.18% from minus 5.29% on Monday.

Year-to-date index returns fell to minus 13.58% on Tuesday from minus 12.76% at the start of the week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.