Burger King notes from Carrols, GPS slide; AMC, Community Health notes under pressure

By Cristal Cody

Tupelo, Miss., May 12 – Bonds from Burger King operator Carrols Restaurant Group, Inc. felt some pain after posting a first-quarter loss on Thursday.

The company’s 5 7/8% senior notes due 2029 slid 7 points “post results,” a market source said.

Burger King and Pizza Hut franchisee GPS Hospitality Holding Co. LLC’s 7% senior secured notes due 2028 also were down 2¾ points during the session.

Market tone was mixed with stocks little changed.

The iShares iBoxx High Yield Corporate Bond ETF closed off 4 cents at $76.71.

The Chicago Board Options Exchange’s CBOE Volatility index declined 2.43% by the afternoon to 31.77.

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 gave back 3½ points in heavy trading totaling over $40 million.

The bonds have dropped over 15 points since the start of the month.

Also, the distressed health care space has been under pressure in May with paper from Community Health Systems Inc. declining about 7¼ points to 9 points this month.

Carrols Restaurant drops

Carrols Restaurant Group’s 5 7/8% senior notes due 2029 (Caa1/CCC) traded on Wednesday with a 72 handle that quickly slid to 65 on Thursday after the earnings release, a source said.

The notes were quoted down 7 points at 65¾ bid on $13 million of secondary volume.

Carrols Restaurant reported a first-quarter loss of $21.3 million, wider than the $7.2 million loss a year ago.

Total sales were up 2.4% in the quarter.

The Syracuse, N.Y.-based company operates more than 1,000 Burger King and Popeyes Louisiana Kitchen restaurants in the United States.

GPS declines

GPS Hospitality’s 7% senior secured notes due 2028 (Caa1/B-/B-) fell 2¾ points to 69¼ bid by late Thursday afternoon, a market source said.

The notes were down about 7 points month to date and have declined from the 77¼ bid range in mid-April.

The Atlanta-based privately held company is a franchisee of Burger King, Pizza Hut and Popeyes restaurants.

AMC secureds lower

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) softened 3½ points to 68 bid on $42 million of trading volume on Thursday, a source said.

The bonds have shed over 15 points since the start of the month.

On Monday, AMC reported first-quarter revenue and losses that improved from a year ago.

The Leawood, Kan.-based movie theater owner has diversified its operations, reporting in March it purchased 22% of a company that operates a 71,000-acre gold and silver mine in Nevada.

CHS trades down

CHS/Community Health Systems, Inc.’s 6 1/8% senior secured notes due 2030 (Caa2/CCC) were about 1¼ points weaker on Thursday at 73¼ bid, a market source said.

The bonds have declined about 9 points since ending April at the 82 bid to 83 bid range.

The Franklin, Tenn.-based operator of acute care and outpatient facilities’ 6 7/8% senior notes due 2028 (Caa2/CCC) were off 1 point at 71½ bid in light secondary trading.

The issue has dropped about 7¼ points in May.

Parent company Community Health Systems reported a first-quarter loss on April 27.

Distressed returns soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Wednesday to minus 0.66% from minus 0.93% on Tuesday and minus 1.41% on Monday.

Month-to-date total returns softened to minus 6.8%, compared to minus 6.18% on Tuesday and minus 5.29% at the start of the week.

Year-to-date index returns were weaker on Wednesday at minus 14.15% versus minus 13.58% on Tuesday and minus 12.76% on Monday.

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