CHS paper climbs in heavy secondary supply; Rite Aid up, CDS spreads come in; Qurate mixed

By Cristal Cody

Tupelo, Miss., Oct. 27 – CHS/Community Health Systems, Inc.’s bonds jumped about 3 points to more than 6 points in heavy trading that saw the name catapult to the top of most-active lists on $100 million-plus of secondary volume Thursday.

On Wednesday, CHS reported after the markets closed steep profit losses for the third quarter ended Sept. 30.

Also in the distressed space, Rite Aid Corp. saw its credit default swaps spread come in more than 400 basis points this week after gapping out 1,375 bps over the three prior weeks.

The drugstore chain’s 8% senior secured notes due 2026 (B3/CCC-/BB-) improved about 1 point Thursday.

The junk space was stronger as stock indexes finished mixed.

The iShares iBoxx High Yield Corporate Bond ETF rose 53 cents, or 0.73%, at $73.97.

Measured market volatility was mostly steady with the CBOE Volatility Index up 0.33% to 27.37.

In other distressed secondary trading, Qurate Retail Inc.’s 8½% senior debentures due 2029 (B2/B-) fell about ¼ point over the session.

Meanwhile, the home shopping network owner’s CDS spreads tightened more than 80 bps this week.

CHS paper higher

CHS/Community Health’s paper climbed higher in heavy secondary trading volume totaling more than $100 million on Thursday, a source said.

The 4¾% notes due 2031 (B2/B) dominated the day’s activity with more than $40 million of paper traded.

The bonds went out up 3 points at 65¼ bid.

CHS’ 5¼% notes due 2030 (B2/B) traded 3 3/8 points better at 67 bid on more than $21 million of notes changing hands.

The 6 7/8% senior secured notes due 2029 (Caa2/CCC) rallied nearly 6½ points to trade near the 42½ bid area on $16 million of supply Thursday.

CHS’ 5 5/8% senior secured notes due 2027 (B2/B/BB-) picked up 4¾ points to head out at 75 bid on over $11 million of volume.

The Franklin, Tenn.-based operator of acute care and outpatient facilities reported after the market closed Wednesday that third-quarter profit sank to a loss of $42 million from income of $111 million a year ago.

Rite Aid better

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) traded about 1 point better Thursday to around 65¾ bid by the close, a source said.

Also, Rite Aid’s CDS spreads tightened 413 bps over the past week ended Wednesday to 3,302 bps, according to a Moody’s Investors Service report.

The Camp Hill, Pa.-based drug retailer’s CDS spreads had widened 459 bps in the prior week, 120 bps in the previous week and 796 bps the week prior.

Qurate notes dip

Qurate Retail’s 8½% senior debentures due 2029 (B2/B-) issued by Liberty Media Corp. were quoted trading around the 63½ bid area Thursday, a source said.

The issue was down about ¼ point in light volume.

CDS spreads from the West Chester, Pa.-based home shopping network owner, formerly known as Liberty Interactive Corp., tightened 81 bps for the week ended Wednesday to 1,373 bps, Moody’s said.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond Index one-day returns climbed higher Wednesday to 0.67% from 0.18% on Tuesday and 0.01% on Monday.

Month-to-date total returns were stronger at negative 0.54% versus negative 1.2% on Tuesday and negative 1.38% at the week’s start.

Year-to-date total return losses narrowed to negative 26.61% on Wednesday from negative 27.1% on Tuesday and negative 27.23% on Monday.

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