Shutterfly lower; Rite Aid secured notes drop; Transocean mixed after pre-holiday gains

By Cristal Cody

Tupelo, Miss., Oct. 11 – Shutterfly Inc.’s paper declined on Tuesday in the first session back after the company was downgraded ahead of the Columbus Day holiday weekend.

The company’s 8½% senior secured notes due 2026 (B2/CCC) went out down 1 point.

Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) traded down more than 4 points in thin volume.

The drug retailer’s credit default swap spreads moved out nearly 800 basis points in the prior week.

Stocks were mixed following the long holiday weekend after selling off on Friday.

The iShares iBoxx High Yield Corporate Bond ETF picked up 22 cents, or 0.31%, to head out at $71.46.

Market volatility also was creeping up on Tuesday.

The CBOE Volatility index rose 3.64% to 33.63 by the close.

Oil was weaker on the day.

West Texas Intermediate crude oil benchmark futures for November deliveries settled down $1.78 to $89.35 a barrel.

Transocean Inc.’s notes were flat to softer in thin trading activity after the offshore driller and its bonds were upgraded on Monday by S&P Global Ratings.

Transocean’s 7½% senior notes due 2031 (C/CCC) fell about 1 point.

Shutterfly softens

Shutterfly’s 8½% senior secured first-lien notes due 2026 (B2/CCC), issued by Photo Holdings Merger Sub Inc., went out Tuesday down 1 point at 64¼ bid with more than $3 million of notes traded over the day, a source said.

Shutterfly’s notes finished Friday nearly 1½ points higher on the week.

The bonds, though, were moving at new trading lows since the paper was issued in October 2019 in a $785 million offering at 94.37 to yield 9 5/8% to fund the company’s buyout by Apollo Global Management LLC.

S&P said Friday it dropped Shutterfly to CCC from B- with the company facing tight liquidity on reduced consumer spending and higher interest on its floating-rate debt.

Shutterfly is a Redwood City, Calif.-based retailer and manufacturing platform for personalized products and communications.

Rite Aid declines

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) moved about 4¼ points lower on Tuesday in light secondary trading, a source said.

The bonds were quoted at 64 bid.

The Camp Hill, Pa.-based drug retailer’s CDS spreads widened nearly 800 bps in the previous week ended Wednesday.

Transocean mostly quiet

Transocean’s 7½% senior notes due 2031 (C/CCC) softened about 1 point to 58½ bid in light trading supply on Tuesday, a source said.

The bonds went out Friday more than 7 points higher on the week.

Transocean’s paper was mostly quiet with the 8% debentures due 2027 (C/CCC) last seen trading on Thursday more than 7 points better on the week at 77½ bid.

On Monday, S&P raised parent Transocean Ltd.’s rating and upgraded the ratings on its debt.

The Steinhausen, Switzerland-based offshore driller announced in September that it executed privately negotiated bond exchange and purchase agreements that provided it with $175 million of liquidity.

Distressed returns drop

S&P U.S. High Yield Corporate Distressed Bond index one-day returns dropped to minus 0.62% on Friday from 0.17% on Thursday, minus 0.25% on Wednesday, 1.06% on Tuesday and 0.47% in the Oct. 3 session.

Month-to-date total returns fell to 0.82% on Friday, compared to 1.45% on Thursday, 1.28% on Wednesday, 1.54% on Tuesday and 0.47% in the first session of October.

Year-to-date total returns were at minus 25.61% on Friday, minus 25.14% on Thursday, minus 25.27% on Wednesday, minus 25.08% on Tuesday and minus 25.87% at the start of the week.

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