Credit Suisse notes improve, CDS spreads widen; Rite Aid declines, CDS spreads gap out

By Cristal Cody

Tupelo, Miss., Oct. 6 – Credit Suisse Group AG’s junk notes saw some relief in the secondary market on Thursday, while its credit default swap spreads ended the week more than 150 basis points wider.

Market tone continued Wednesday’s softness into Thursday with stock indices all lower.

The S&P 500 index closed down 1.02%.

The iShares iBoxx High Yield Corporate Bond ETF fell 22 cents, or 0.3%, to $73.01.

Volatility moved up after drifting lower in the front half of the week.

The CBOE Volatility index climbed 7% to 30.52.

In other distressed paper, Rite Aid Corp.’s bonds and its CDS spreads saw continued pressure this week.

The 8% senior secured notes due 2026 (B3/CCC-/BB-) went out down more than 2 points in thin trading on Thursday.

Rite Aid’s CDS spreads moved out nearly 800 bps this week ended Wednesday.

Credit Suisse mixed

Credit Suisse’s 7½% perpetual notes, which gave back about 3¾ points on Wednesday, improved about 2 points to 85 bid on Thursday, a market source said.

The issue was trading down more than 5 points on the week.

Credit Suisse’s CDS spreads, meanwhile, widened 173 bps this past week ended Wednesday to 435 bps, a Moody’s Investors Service report showed.

The Zurich-based financial services company’s AT1 capital and CDS spreads softened at the start of the week on restructuring concerns following weekend calls the bank made to investors.

Rite Aid weaker

Rite Aid’s paper and its CDS spreads are weaker so far in October, sources said.

The pharmacy chain’s 8% senior secured notes due 2026 (B3/CCC-/BB-) went out down more than 2 points in thin trading on Thursday.

The notes were quoted trading 1 point lower earlier in the day at the 68 bid area before heading out lower on a 66 handle.

Meanwhile, Rite Aid’s CDS spreads moved out 796 bps this week, according to a Moody’s report on Thursday.

The Camp Hill, Pa.-based drug retailer’s CDS spreads widened to 3,137 bps for the past week ended Wednesday.

Distressed returns down

S&P U.S. High Yield Corporate Distressed Bond index one-day returns softened on Wednesday to minus 0.25% after seeing gains of 1.06% on Tuesday and 0.47% on Monday.

Month-to-date total returns eased to 1.28% versus 1.54% on Tuesday and 0.47% at the start of the week.

Year-to-date total returns on Wednesday posted at minus 25.27%, compared to minus 25.08% on Tuesday and minus 25.87% on Monday.

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