CHS higher; AMC up; Country Garden sinks at November open; Evergrande paper worsens

By Cristal Cody

Tupelo, Miss., Nov. 1 – CHS/Community Health Systems, Inc.’s paper saw new gains in the distressed debt space on Tuesday.

The 6 1/8% senior secured notes due 2030 (Caa2/CCC) were up about 1¼ points after ending October down more than 5 points.

Financial markets were mixed with stocks down and tone softer.

The iShares iBoxx High Yield Corporate Bond ETF recovered 43 cents, or 0.59%, to head out at $73.58 on Tuesday after declining $1.12 in the prior session.

The Fear Factor index was little changed. The CBOE Volatility index fell 0.54% to 25.74.

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) saw moderate gains on Tuesday after closing October weaker by 15 points.

The bonds traded about ½ point stronger over the day.

In other distressed markets, Country Garden Holdings Co. Ltd.’s paper opened November weaker following a downgrade on Monday from Fitch Ratings.

The distressed property developer’s 8% notes due 2024 sank about 9¾ points as the new month kicked off.

The space has seen numerous defaults since late 2021 from issuers that include China Evergrande Group, Kaisa Group Holdings Ltd. and Fantasia Holdings Group Co. Ltd.

China Evergrande Group’s paper is now trading as low as 3½ bid.

CHS secureds up

CHS/Community Health’s 6 1/8% senior secured notes due 2030 (Caa2/CCC) traded about 1¼ points higher on Tuesday at 42½ bid in light secondary activity totaling about $3 million, a source said.

The bonds ended October about 6¼ points softer from the prior month.

CHS’ paper has been strongly traded since last week when the Franklin, Tenn.-based operator of acute care and outpatient facilities reported heavy third-quarter losses.

AMC trades higher

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) traded about ½ point stronger on Tuesday at 53¾ bid, a source said.

The bonds closed out October weaker by 15 points from September.

The company’s 7½% notes due 2029 (Caa1/B-) were mostly flat at 68¾ bid by the close.

AMC sold $950 million of the first-lien notes back in February at par.

In October, the Leawood, Kan.-based movie theater owner and gold and silver mine investor priced $400 million of new 12¾% five-year senior secured notes (B3/B).

Country Garden drops

Country Garden’s 8% senior notes due 2024 (//BB-) sank about 9¾ points in trading as November opened, a source said Tuesday.

The issue traded as high as 17 bid early in the session before dropping to the 15½ bid range by late afternoon.

The bonds ended October at 25¼ bid, down from the 38½ bid area at the end of September.

County Garden’s 5 1/8% senior notes due 2025 (//BB-) also softened in light trading on Tuesday to 9½ bid.

The notes were down from where the issue was last active in the prior week at the 11 bid area.

Fitch said Monday it downgraded Country Garden (Ba2/BB/BB-) and its bonds to BB- from BB+ and assigned a negative outlook, based on the property sector’s continued poor capital market conditions.

Moody’s dropped the Foshan, China-based property developer to junk in June. The company saw further downgrades in September from Moody’s and S&P Global Ratings.

Evergrande below 5 bid

Distressed property developer China Evergrande Group’s paper is now trading in the 3½ bid to 4¾ bid area, according to a market source.

The 8¾% notes due 2025 slipped 1/8 point to 3½ bid on about $2 million of secondary action on Tuesday.

The issue ended October at 3 5/8 bid, down from the 6½ bid area seen over September.

China Evergrande’s 9½% notes due 2024 also were flat at 3½ bid on about $2 million of trading volume during the session.

Credit ratings on the Shenzhen, China-based real estate developer were withdrawn in October by Moody’s due to insufficient information and in June by Fitch.

October returns positive

S&P U.S. High Yield Corporate Distressed Bond index one-day returns started the week off at 0.15%, down from 0.43% on Friday but up from 0.01% in the same day last week.

Month-to-date total returns for October ended at 0.74% on Monday, up from 0.59% on Friday and minus 1.38% in the week ago session.

Year-to-date total returns were minus 25.67% on Monday, improved from minus 25.78% on Friday and minus 27.23% the same day a week ago.

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