AMC notes decline; CineMedia flat; Embarq lower; Rite Aid weakens; Bed Bath & Beyond up

By Cristal Cody

Tupelo, Miss., Sept. 29 – AMC Entertainment Holdings, Inc.’s paper dropped on Thursday in strong secondary trading with the theater space remaining under pressure as September closes.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) fell more than 4 points on $23.5 million of paper traded.

The space has been under pressure over the month with movie theater chain Cineworld Group plc filing for Chapter 11 bankruptcy on Sept. 7.

Cinema advertising company National CineMedia, LLC’s 5¾% senior notes due 2026 (Caa3/CC) were little changed in thin trading after S&P Global Ratings downgraded the paper.

Embarq Corp.’s 7.995% notes due 2036 (Caa2/BB/BB) declined to a high 40s handle before improving slightly in busy secondary action as its future parent company announced late afternoon that it withdrew a debt financing package due to market conditions.

Market jitters permeated through equities with the S&P 500 index down 2.11% and the Nasdaq off 2.84%.

The iShares iBoxx High Yield Corporate Bond ETF fell 68 cents or 0.94%, to $71.72.

Volatility was up 5.96% with the CBOE Volatility index at 31.98.

Rite Aid Corp.’s bonds fell about 4¼ points to 7 points on Thursday on the heels of the company’s weak fiscal 2023 second-quarter results.

Rite Aid reported a net loss of $6.07 a share, up from a loss of $1.86 a share a year ago.

Revenue for the quarter ended Aug. 27 was down to $5.9 billion from $6.1 billion on a reduction in revenue from Covid vaccines and testing, among other causes, Rite Aid said.

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC-/CCC) slid about 7 points by the close.

In addition, Rite Aid’s credit default swap spreads moved out more than 250 basis points this week.

Bed Bath & Beyond Inc.’s paper improved after the company reported second-quarter results during the session.

The retailer’s 4.915% senior notes due 2034 (Caa3/CCC) rose ¾ point.

AMC notes down

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) declined more than 4¼ points to 68¾ bid by the close on Thursday, a source said.

The notes, yielding about 23%, were among the most active distressed names seen trading on $23.5 million of volume.

AMC’s notes rallied at the start of the week following the company’s announcement Monday that it plans to sell up to 425 million of its new preferred equity units.

The bonds have given back 6¾ points since Monday.

The Leawood, Kan.-based movie theater owner and gold and silver mine investor’s common stock closed Thursday down 7.19% at $7.10.

CineMedia mostly quiet

National CineMedia’s 5¾% senior notes due 2026 (Caa3/CC) went out mostly flat in thin trading near the 24 bid range, a source said.

S&P on Thursday downgraded the Centennial, Colo.-based cinema advertising company to CCC from B- and the bonds to CC from CCC.

S&P said a payment default or subpar debt restructuring “is looking increasingly likely for National CineMedia” due to upcoming maturities in 2023 and difficult debt capital market conditions.

Embarq paper softens

Embarq’s 7.995% notes due 2036 (Caa2/BB/BB) went out at 50 bid on Thursday, down 2¼ points on the day, a source said.

The notes bounced back from lows in the 47 bid range earlier in the session.

Embarq’s bonds have given back 6 points since Monday.

The notes plunged more than 24 points in the prior week.

The Overland Park, Kan.-based telecommunications company is set to become a subsidiary of Connect Holding II LLC, doing business as Brightspeed, in connection with its acquisition from Lumen Technologies, Inc. by Apollo Global Management, Inc. funds.

Connect Holding said Thursday that Brightspeed has withdrawn an offering of senior secured notes and a first-lien term loan due to market conditions, though it expects to commence a debt financing package in the future.

The Charlotte, N.C.-based company plans to complete the acquisition of assets from Lumen in early October with equity from Apollo and proceeds from committed financing ahead of the deal announcement.

Rite Aid weaker

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC-/CCC) dropped about 7 points to head out Thursday wrapped around the 59 bid area, a source said.

The issue was active on $1.29 million of volume.

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) also fell about 4¼ points to 73 bid on $3.1 million of paper traded on Thursday.

Meanwhile, Rite Aid’s CDS spreads widened this week, according to a Moody’s Investors Service report on Thursday.

The Camp Hill, Pa.-based drug retailer’s CDS spreads eased 259 bps for the past week ended Wednesday to 2,340 bps.

Bed Bath & Beyond up

Elsewhere in the retail space, Bed Bath & Beyond’s 4.915% senior notes due 2034 (Caa3/CCC) were quoted late Thursday at 15¾ bid, up about ¾ point in distressed trading, a source said.

The retailer announced Thursday that fiscal 2022 second-quarter income dropped to a loss of $4.59 a share versus a gain of 72 cents a share a year ago. Revenue was down 28% at $1.44 billion.

Bed Bath & Beyond said the results came in as expected and as previously announced.

The Union, N.J.-based home products retailer is underway in a search for a new chief executive and strategic changes that include closing stores.

Distressed index softens

S&P U.S. High Yield Corporate Distressed Bond index one-day returns widened Wednesday to minus 0.83% from minus 0.6% on Tuesday and minus 0.56% on Monday.

Month-to-date total returns fell to minus 5.55% from minus 4.76% on Tuesday and minus 4.18% at the start of the week.

Year-to-date total returns declined midweek to minus 25.47% from minus 24.85% on Tuesday and minus 24.4% on Monday.

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