Qurate, QVC paper steady following downgrade; Diversified Health soft; Bausch lower

By Cristal Cody

Tupelo, Miss., Sept. 8 – Paper from Qurate Retail Inc. was active in the distressed market following a downgrade from S&P Global Ratings on Thursday, along with the shopping network owner’s subsidiary, QVC Inc., but the bonds went out mostly flat on the day.

Qurate’s 8½% senior debentures due 2029 (B2/B-) were steady, though down about 1 point in post-holiday trading this week.

QVC’s 5.45% senior secured notes due 2034 (Ba2/BB) went out mostly flat on the day and week.

Meanwhile, credit default swap spreads from Qurate, formerly known as Liberty Interactive Corp., tightened nearly 25 basis points this week.

Stronger market tone carried over from Wednesday into Thursday with stock indices higher. The S&P 500 rose 0.66%.

The iShares iBoxx High Yield Corporate Bond ETF was up 31 cents, or 0.41%, at $75.49.

Market volatility also continued to decline on Thursday with the CBOE Volatility index 4.18% lower at 23.61.

Oil prices recovered some ground after Wednesday’s losses.

West Texas Intermediate crude oil benchmark futures for October deliveries rose $1.60 to settle at $83.54 a barrel.

Trading quieted on Thursday in Diversified Healthcare Trust’s 4 3/8% guaranteed senior notes due 2031 (B3/BB) after the paper fell about ½ point the previous day following a downgrade from Moody’s Investors Service.

The notes were trading more than 3 points lower on the week.

Overall distressed secondary activity has been on the lighter side so far in post-holiday trading, market sources report.

Bausch Health Cos. Inc.’s notes continued to see some of the heaviest trading in the junk and distressed spaces during the session.

The pharmaceutical company’s notes were down about ¾ point to more than 2 points after Bausch released a statement on Thursday to clarify provisions in its previously announced debt exchange offers.

Qurate, QVC mostly flat

Qurate Retail’s 8½% senior debentures due 2029 (B2/B-) issued by Liberty Media Corp. stayed busy in numerous trades on Thursday but the issue was mostly unchanged with a 79 handle, a source said.

The notes have traded strongly since the market opened after the Labor Day holiday and were down about 1 point this week.

Subsidiary QVC’s 5.45% senior secured notes due 2034 (Ba2/BB) went out mostly flat at 71¾ bid.

The notes were mostly unchanged on the week.

S&P said Thursday it dropped Qurate and QVC’s debt ratings on weak credit metrics from ongoing supply chain issues and sales expected to remain under pressure over the next year.

The West Chester, Pa.-based media company’s CDS spreads firmed nearly 25 bps in the past week ended Wednesday to 1,256 bps, according to a market source.

Diversified Health soft

Diversified Healthcare’s 4 3/8% guaranteed senior notes due 2031 (B3/BB) quieted in the secondary market on Thursday after the notes softened about ½ point on Wednesday to 67 bid, a source said.

The notes were down about 3½ points this week.

Moody’s said Wednesday it downgraded the trust’s issuer and senior note ratings based on factors including weakened cash flows from its senior housing business.

Diversified Healthcare is a Newton, Mass.-based REIT that specializes in owning U.S. health care properties.

Bausch notes pressured

Bausch’s 5½% secured notes due 2025 (B3/B/BB-) saw heavy secondary action on Thursday, trading down 3/8 point at 55½ bid on $26 million of volume, a source said.

Bausch’s 5½% secured notes due 2025 (B3/B/BB-) fell more than ¾ point by the day’s end to trade under the 80½ bid area on $8 million of volume.

The company’s 6¼% senior notes due 2029 (Caa3/CC/C) shed 1½ points to a quote of 33 bid on $3 million of paper traded on Thursday.

Bausch’s 9¼% senior notes due 2026 (Caa3/CC/C) were down 2 points at 58 bid on $7 million of supply.

The 5% senior notes due 2029 (Caa3/CC/C) also shed 2¾ points by the close on $1 million of notes traded. The issue was quoted at 33¼ bid.

Bausch is conducting a debt restructuring to replace existing senior debt with new first-lien and second-lien secured bonds.

The company said Thursday it released the latest statement to clarify certain provisions in its Aug. 30 exchange offers in response to concerns raised by noteholders.

The Laval, Quebec-based pharmaceutical company plans to spin off its unit Bausch + Lomb.

Distressed returns

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened on Wednesday to 0.03% from 0.15% on Tuesday at the short week’s start.

Month-to-date total returns improved to minus 0.87% from minus 0.9% at the week’s start.

Year-to-date total returns rose to minus 21.79% versus minus 21.81% on Tuesday.

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