Revlon notes climb higher; Rite Aid paper softens, CDS spreads tighten

By Cristal Cody

Tupelo, Miss., June 7 – Revlon Inc. was one distressed name that continued to gain on Tuesday after picking up about 5 points in the prior session, a source said.

The bonds have rallied the past two sessions on reports the company is in discussions to extend its debt maturities.

Market tone over the day remained strong as stock indices climbed, crude oil gained and measured volatility dropped over 4%.

The iShares iBoxx High Yield Corporate Bond ETF finished up 18 cents at $78.23.

In other distressed issues, Rite Aid Corp.’s secured and unsecured paper traded softer in thin supply on Tuesday, while the company’s credit default swap spreads came in over 400 basis points in the past week.

Revlon rallies

Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 (C/C) climbed over 3¾ points to 29 bid in light secondary action during the session, a source said.

The bonds went out Monday 5 points higher.

The New York-based cosmetics manufacturer’s issue is nearing the 30 bid to 40 bid range last seen in March and April.

Revlon reported improved first-quarter earnings and revenue in May.

Rite Aid lower

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC/CCC) declined nearly 1¾ points to a print of 62.66 in light secondary action on Tuesday, a source said.

The company’s 8% senior secured notes due 2026 (B3/CCC/BB-) also were over ½ point lower at the 81¼ bid area.

Meanwhile, the Camp Hill, Pa.-based drug retailer’s CDS spreads improved by more than 400 bps during the prior week, a market source said.

Rite Aid’s CDS spreads were at 2,768 bps for the past week ended Wednesday, improved from 3,185 bps in the prior week.

Distressed returns up

The S&P U.S. High Yield Corporate Distressed Bond index saw gains at the start of the week.

One-day total returns rose to 0.27% on Monday from minus 0.15% on Friday.

Month-to-date total returns increased to 0.49% versus 0.21% ahead of the weekend.

Year-to-date index returns were improved at minus 14.1% on Monday versus minus 14.33% on Friday.

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