Credit Suisse junk notes lower; Embarq paper softens in active trading; Carvana sinks

By Cristal Cody

Tupelo, Miss., Oct. 5 – Credit Suisse Group AG’s riskiest paper saw further losses on Wednesday, trading down 3¼ points to 3¾ points and carrying yields of about 20% to 25% in mostly light secondary action.

“It’s a little slow with the holiday,” a source said. “The market’s been flipping around. Things were better Monday and Tuesday – today’s it’s a bit weaker.”

Distressed secondary supply overall was light with the Yom Kippur holiday and upcoming long Columbus Day holiday weekend, according to market sources.

Stocks reversed course on Wednesday after strong gains the previous day on news of Elon Musk’s revived $44 billion takeout offer for Twitter, Inc.

The S&P 500 index edged down 0.2%, while the Nasdaq softened 0.25%.

The iShares iBoxx High Yield Corporate Bond ETF slipped 29 cents, or 0.39%, to $73.23.

Volatility, though, continued to decline a third consecutive day.

The CBOE Volatility index fell 1.79% to 28.55.

Embarq Corp.’s 7.995% notes due 2036 (Caa2/BB/CCC) slipped more than ¾ point on Wednesday with the issue among the most active distressed names seen on more than $18 million of secondary action, a source said.

Carvana Co.’s 5 5/8% notes due 2025 (Caa2/CCC) dropped more than 3 points by the day’s end on about $2.5 million of volume.

Credit Suisse drops

Credit Suisse’s junk paper declined about 3¼ points to 3¾ points on Wednesday in fairly light secondary supply, a source reported.

The notes had steadied Tuesday after sliding about 5¾ points to more than 10 points on Monday on restructuring fears.

Credit Suisse’s 7½% perpetual notes shed about 3¾ points to a quote of 83 bid on $2.71 million of paper traded.

The issue was mostly flat on Tuesday after declining more than 10 points at the start of the week.

Credit Suisse’s 6 3/8% perpetual notes also gave back 3¼ points on Wednesday to trade at 66¼ bid. Volume was light with $1 million of supply reported.

The Zurich-based financial services company’s AT1 capital and credit default swap spreads reportedly hit the skids on Monday on restructuring concerns following a series of weekend calls the bank made to its investors.

Embarq softens

Embarq’s 7.995% notes due 2036 (Caa2/BB/CCC) traded down more than ¾ point to near the 49 bid area on Wednesday, a source said.

Secondary action was strong with the Overland Park, Kan.-based telecommunications company among the most active names traded on about $18.5 million of volume.

The notes went out Tuesday mostly flat at 49¾ bid and were mostly unchanged month to date after plunging about 25 points in September.

Fitch Ratings downgraded Embarq’s notes on Tuesday following the completion of its takeover by Connect Holding LLC and subsidiary Connect Holding II LLC, doing business as Brightspeed, from Lumen Technologies, Inc. using funds from Apollo Global Management, Inc. and committed financing.

On Thursday, Brightspeed withdrew 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.

Carvana down

Carvana’s 5 5/8% notes due 2025 (Caa2/CCC) dropped more than 3 points to 71¾ bid by Wednesday’s close, a market source said.

The notes were yielding 18.3% on $2.49 million of secondary volume.

The Phoenix-based online car retailer’s stock also closed the day down 7.35% at $21.55.

Distressed index stronger

S&P U.S. High Yield Corporate Distressed Bond index one-day returns climbed on Tuesday to 1.06% from 0.47% on Monday

Month-to-date total returns also rose to 1.54% so far in October from 0.47% on Monday.

September returns ended at minus 6.48%.

Year-to-date total returns improved on Tuesday to minus 25.08% from minus 25.87% on Monday.

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