Kohl’s paper declines; Cleaver-Brooks secured notes stage comeback; Diebold Nixdorf up

By Cristal Cody

Tupelo, Miss., July 19 – Investment-grade-rated Kohl’s Corp.’s bonds were trading near distressed levels in heavy supply this week.

The retailer’s 5.55% notes due 2045 (Baa2/BBB-) dropped more than 1¾ points on Tuesday and traded at yields up to more than 8%.

S&P Global Ratings revised the company’s outlook to negative during the session.

Kohl’s reported at the start of the month that it called off placing the business up for sale.

Meanwhile, Cleaver-Brooks, Inc.’s 7 7/8% senior secured notes due 2023 (Caa1/CCC) had traded at yields well north of 15% up until Tuesday when the issue rallied more than 4½ points to better than par and yields came in below 8%.

Financial markets saw an upswing after Monday’s weak tone with stocks jumping more than 2% as volatility receded over the session.

“The market was strong,” a source said Tuesday, noting all the major indexes were higher.

The S&P 500 index climbed 2.76%, while the Nasdaq gained 3.11%.

The iShares iBoxx High Yield Corporate Bond ETF finished up 99 cents, or 1.32%, to $75.76.

In other distressed secondary volume, Diebold Nixdorf Inc.’s notes picked up 1½ points to 1¾ points in light trading.

Kohl’s softens

Kohl’s 3 3/8% senior notes due 2031 (Baa2/BBB-) fell more than ½ point to 75 1/8 bid and yielding 7¼% in strong activity by late afternoon trading on Tuesday, a source said.

Kohl’s 5.55% senior notes due 2045 (Baa2/BBB-) dropped more than 1¾ points to the 73 bid range and yielding more than 8% in light trading.

The Menomonee Falls, Wis.-based department store chain announced July 1 that it declined a revised buyout offer of $53 per share from the Franchise Group.

Kohl’s also said it expects second-quarter sales to be down “high-single digits” and will release results on Aug. 18.

Cleaver-Brooks rallies

Elsewhere, Cleaver-Brooks’ 7 7/8% senior secured notes due 2023 (Caa1/CCC) were quoted trading as high as 100¼ bid over the afternoon.

“They were in the mid-90s,” a source said.

The notes were seen by the close up more than 4½ points near the par ¼ bid area and with a yield of 5½% on $8 million of volume.

On Monday, the issue was quoted at 95½ bid and yielding more than 15%.

Cleaver-Brooks’ issue ended June with a 94 handle.

The Thomasville, Ga.-based boiler manufacturer and provider held a July 8 investor conference call with holders of the notes, analysts and broker-dealers.

Diebold Nixdorf up

Diebold Nixdorf’s paper traded about 1½ points to 1¾ points better in secondary action on Tuesday, a source said.

The company’s 8½% senior notes due 2024 (Ca/CCC-) rose 1½ points to 49½ bid on $3 million of paper traded.

Diebold Nixdorf’s 9 3/8% senior secured notes due 2025 (Caa2/CCC+) also went out 1¾ points higher on the day at 74¼ bid. Trading was on the light side with $1 million of volume.

The Hudson, Ohio-based financial technology company plans to report second-quarter earnings results on Aug. 2.

Distressed index returns

The S&P U.S. High Yield Corporate Distressed Bond index softened but remained positive on Monday.

One-day total returns were 0.67% at the start of the week, down from 0.82% on Friday but improved from minus 0.08% in the same day a week ago.

Month-to-date total returns rose to minus 1.13% on Monday from minus 1.78% on Friday but below the minus 0.6% reading in the week-ago session.

Year-to-date total returns were minus 23.5% on Monday versus minus 24.01% on Friday and minus 23.09% in the July 11 session.

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