AMC second-lien notes rally; Rite Aid paper, CDS spreads improve; Endo lower; Talen off

By Cristal Cody

Tupelo, Miss., May 26 – AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) rallied 3¾ points in the strongest trading action seen in the distressed space on Thursday.

Meanwhile, Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC/BB-) were improved on Thursday and trading over 5 points better on the week, while the drugstore’s credit default swap spreads also tightened this week.

Market tone remained strong on Thursday with stocks higher again after improving in the prior session following the release of the minutes from the Federal Reserve’s May monetary policy meeting.

The iShares iBoxx High Yield Corporate Bond ETF, which jumped $1.17 on Wednesday, added $1.09 on Thursday to $79.48.

Looking at other distressed paper, Endo International plc’s senior notes shed another point over the day and are trading under 10 bid.

Talen Energy Supply LLC’s 10½% senior notes due 2026 (/D/C) dropped ½ point over the day but remain over 10 points better since the company filed for Chapter 11 bankruptcy in May.

AMC second-liens up

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) climbed 3¾ points to 74 bid in active trading over the day, a market source said.

The bonds were among the most active distressed issues trading on Thursday on $22 million of volume.

AMC’s issue has softened about 10 points over the month.

The Leawood, Kan.-based movie theater owner and gold and silver mine investor’s stock was up 2.95% at $12.23 on Thursday but was well off the ‘meme stock’ contender’s 52-week high of $72.62.

Rite Aid better

Rite Aid’s secured notes and CDS spreads improved this week, according to market sources.

The company’s 8% senior secured notes due 2026 (B3/CCC/BB-) traded over 2 points better on Thursday at the 81½ bid area.

The bonds are up more than 5 points so far this week.

Rite Aid’s CDS spreads also improved.

The Camp Hill, Pa.-based drug retailer’s CDS spreads tightened 166 basis points in the past week ended Wednesday to 3,185 bps.

Endo bonds soften

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CC) were trading down 1 point by the end of Thursday’s session after shedding ¾ point the prior day, a source said.

The notes were quoted at 7 bid on $4 million of secondary volume.

Endo’s senior notes have plunged more than 35 points this month since the company reported a first-quarter loss and forecasted a second-quarter loss.

S&P downgraded the Dublin-based pharmaceutical company last week on increased restructuring risks and an increased risk of a distressed exchange or below-par redemption of its debt.

Talen Energy off

Talen Energy’s 10½% senior notes due 2026 (/D/C) dropped ½ point to 55 bid by late in the day, a market source said.

Trading was steady on $4 million of volume.

Talen’s notes have climbed from the low 40s bid range since the company filed for Chapter 11 bankruptcy.

The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company announced May 10 the Chapter 11 filing.

Distressed returns up

S&P U.S. High Yield Corporate Distressed Bond index returns improved mid-week.

One-day total returns were higher at 0.59%, compared to minus 0.31% on Tuesday and 0.19% on Monday.

Month-to-date total returns improved to minus 9.26% from minus 9.8% on Tuesday and minus 9.52% on Monday.

Year-to-date index returns rose to minus 16.42% from minus 16.91% on Tuesday and minus 16.66% at the start of the week.

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