Rite Aid, Staples paper, CDS spreads better; bankrupt Revlon notes down; EnLink eyed

By Cristal Cody

Tupelo, Miss., Aug. 4 – Two distressed retailers’ paper and credit default swaps spreads saw improvement Thursday and over the week.

Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) traded 1¼ points better on the day, while its CDS spreads also tightened more than 250 basis points this week.

Staples, Inc.’s senior notes mostly improved on Thursday, while its CDS spreads came in nearly 100 bps this week.

Also in the distressed market, Revlon Inc.’s paper has been soft in light trading since the bankrupt company received approval at the start of the week for a $1.43 billion debtor-in-possession financing package.

Revlon’s 6¼% senior notes due 2024 fell more than 1 point by the close.

Volatility was lower again Thursday with market attention shifting to the July jobs report due Friday.

Overall distressed secondary supply was lighter during the session, according to a market source.

The CBOE Volatility index dropped 0.25, or 1.14%, to 21.70.

The iShares iBoxx High Yield Corporate Bond ETF went out up 20 cents, or 0.26%, to $78.43.

Crude oil and natural gas futures declined with oil prices dropping below $90 a barrel on Thursday.

West Texas Intermediate crude oil benchmark futures for September delivery settled $2.12 lower at $88.54.

EnLink Midstream Partners LP’s 6% perpetual preferred stock (Ba3/B+/BB-) rallied 2½ points, a day after the company reported strong second-quarter earnings and raised its full-year 2022 guidance.

Rite Aid performs better

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) rose 1¼ points in active trading on Thursday to 86¼ bid, while its CDS spreads also tightened this week, market sources said.

The notes were up about 1 point this month after closing out July more than 4 points higher.

Rite Aid’s other issues were mostly better on Thursday but have seen thin trading since the company completed below-par cash tender offers for up to $150 million of its 7½% senior secured notes due 2025, 6 7/8% debentures due 2028 and 7.7% senior debentures due 2027 in June.

The 8% notes were included in the tender offer, but Rite Aid declined to accept the paper.

The 7.7% bonds (Caa2/CCC-/CCC) were seen Thursday at the 73½ bid area, about 2½ points higher on the day.

Rite Aid’s 7½% senior secured notes due 2025 (B3/CCC-/BB-) traded about 1½ points stronger Thursday at the 89½ bid area.

The 6 7/8% debentures due 2028 have not been active in the secondary market in August.

The Camp Hill, Pa.-based drug retailer’s CDS spreads tightened more than 250 bps over the past week ended Wednesday to 1,702 bps.

Staples improves

Staples’ notes traded mostly higher in light secondary action on Thursday, and the company’s CDS spreads also firmed over the week, according to market sources.

The company’s 10¾% senior notes due 2027 (Caa2/CCC+) improved about 1 point in early trading before going out mostly flat near the 75¾ range. The issue was up about ¾ point so far in August.

Staples’ 7½% senior secured notes due 2026 (B3/B) also were seen about ¼ point higher at the 89 bid area on Thursday.

The notes were mostly unchanged from July.

The Framingham, Mass.-based office supply chain’s CDS spreads tightened 95 bps to 1,759 bps in the past week ended Wednesday.

Revlon lower

In bankrupt paper, Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 traded more than 1 point weaker on Thursday at the 8¾ bid area, a source said.

The bonds ended July at 10 bid.

The New York-based cosmetics manufacturer filed for Chapter 11 in June in the U.S. Bankruptcy Court for the Southern District of New York.

Revlon’s DIP financing package approved Monday includes a super priority term loan with a $375 million initial-draw tranche and a $200 million delayed-draw tranche, as well as a $400 million asset-based lending revolving credit facility.

EnLink trades up

Elsewhere, EnLink Midstream’s 6% perpetual preferred stock (Ba3/B+/BB-) rallied 2½ points on Thursday, a market source said.

The issue went out at 72¼ bid on $5 million of paper traded.

The Dallas-based natural gas processor and pipeline operator announced Wednesday that it raised its 2022 earnings guidance to $390 million to $430 million from initial guidance of $230 million to $310 million.

Distressed index gains

S&P U.S. High Yield Corporate Distressed Bond index total returns improved midweek.

One-day returns rose to 0.26% from 0.12% on Tuesday and 0.19% on Monday.

Month-to-date total returns gained Wednesday to 0.57% from 0.31% on Tuesday and 0.19% on Monday in the first session of August.

Year-to-date total returns improved to minus 20.21% from minus 20.42% on Tuesday and minus 20.52% on Monday.

© 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.