Carvana notes lower; Party City, Diebold down; Transocean mixed; Country Garden quiet

By Cristal Cody

Tupelo, Miss., Nov. 8 – Carvana Co.’s notes moved firmly into the distressed space with more declines in lighter secondary trading on Tuesday.

Carvana’s 5 5/8% notes due 2025 (Caa2/CCC) went out down about 2 points and yielding more than 42%.

Meanwhile Tuesday, Party City Holdings Inc.’s 8¾% senior secured notes due 2026 (Caa1/CCC+) plunged 14¼ points after parent Party City Holdco Inc. reported weak third-quarter results and a full-year guidance curbed by soft Halloween sales.

Diebold Nixdorf Inc.’s paper traded about 2¾ points to 3 points lower from the prior week in mostly light supply on Tuesday after the company reported a heavy third-quarter loss.

Diebold Nixdorf’s 8½% senior notes due 2024 (Ca/CCC-) fell about ½ point to ¾ point.

Overall tone was mostly positive in the financial markets with the Dow Jones industrial average up 1.02%.

The iShares iBoxx High Yield Corporate Bond ETF dipped 8 cents, or 0.12%, to $72.81.

Volatility edged up with the CBOE Volatility index 3.24% higher at $25.14.

Oil softened a second day with prices backing down from $90-plus per barrel. West Texas Intermediate crude oil benchmark futures for December delivery settled $2.88 lower at $88.91 a barrel.

Transocean Inc.’s notes traded mostly flat to modestly better on the day in light secondary supply.

In other distressed paper, Country Garden Holdings Co. Ltd.’s paper was thinly traded on Tuesday following a downgrade and ratings withdrawal from S&P Global Ratings.

The property developer’s 6½% notes due 2024 were quoted more than 5 points better from where the issue last traded in the prior week.

Carvana declines

Carvana’s 5 5/8% notes due 2025 (Caa2/CCC) went out Tuesday down about 2 points at 41 7/8 bid and yielding over 42%, a source said.

Secondary action was busy with $14.26 million of volume in the name reported.

Carvana’s 4 7/8% notes due 2029 (Caa2/CCC) also fell 2 points to 32¼ bid on lighter volume of $1.5 million.

Carvana’s notes were seen down as much as 6½ points-plus on Monday on more than $63 million of paper traded after shedding about 5¼ points to 7 points on Friday on about $89 million of secondary supply.

The Phoenix-based online car retailer last week reported third-quarter gross profit sank 31%.

Party City drops

Party City’s 8¾% senior secured notes due 2026 (Caa1/CCC+) slid 14¼ points on Tuesday to 45¼ bid by the day’s close, a source said.

The notes were active in the secondary space on about $10.5 million of volume.

Party City said Tuesday that it had a third-quarter adjusted net loss of $157.2 million, or $1.39 a share, compared to adjusted net income of $2.9 million, or 2 cents a share, a year ago. Sales were down 1.6% in the quarter.

The Woodcliff, N.J.-based retailer also provided a full-year 2022 outlook that factors in “October results, including Halloween performance, which while positive, were at the lower end of our expectations.”

Sales for the year are expected at $2.14 billion to $2.19 billion, or a change of about minus 1% to 1% versus 2021.

Diebold Nixdorf slips

Diebold Nixdorf’s 8½% senior notes due 2024 (Ca/CCC-) fell about ½ point to ¾ point to the 50 bid area in thin trading on Tuesday, a source said.

The notes were down from 53 bid on Friday.

Diebold Nixdorf’s 9 3/8% senior secured notes due 2025 (Caa2/CCC+) moved Tuesday at 71¾ bid by late afternoon after seeing more than $2 million of trading volume.

The notes were last seen in the prior week in the 74½ bid range.

On Tuesday, the company reported a third-quarter loss of $50.5 million, or 63 cents a share, up from a loss of $9.7 million, or 12 cents a share, in the same quarter last year.

Revenue declined 15.4% to $810.4 million.

The ATM manufacturer announced in October it entered into an agreement with financial stakeholders to refinance debt with near-term maturities and provide the company with $400 million in additional financing.

Diebold Nixdorf said Tuesday that the percentage of the company’s term loans held by holders in the agreement has increased from approximately 79% to approximately 97%, and the percentage of the company’s 2024 senior notes held by holders who are party to the agreement has increased from approximately 59% to approximately 83%.

The Hudson, Ohio-based financial and retail technology company expects the agreement with the holders of its term loans, secured notes due 2025 and unsecured notes due 2024 to be completed before Dec. 31.

Transocean steadies

Transocean’s 7½% senior notes due 2031 (C/CCC) improved slightly to 68½ bid on Tuesday from 68 3/8 bid in the prior session, a market source said.

The bonds have gained about ½ point week to date.

Transocean’s 8% debentures due 2027 (C/CCC) went out mostly flat at 83 bid.

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

Country Garden soft

Also Tuesday, Country Garden’s 6½% notes due 2024 were quoted at 18 bid in thin trading, a source said.

The notes were last seen trading at the start of the month at 11 bid, down from a 26 handle in October and a 54 handle in September.

S&P said Tuesday it downgraded Country Garden (Ba2//BB-) to B+ from BB based on narrowing funding channels in both onshore and offshore bond markets and withdrew the rating at the company’s request.

Fitch downgraded the company and its bonds in October.

Moody’s dropped the Foshan, China-based property developer to junk in June.

Distressed returns up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns rose to 0.26% on Monday from minus 0.84% on Friday and 0.15% in the same session a week ago.

Month-to-date total returns for November improved to minus 2.09% at the week’s start from minus 2.34% on Friday.

The year-to-date total return narrowed to minus 27.22% on Monday versus minus 27.41% on Friday.

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