Rite Aid notes remain soft, retailer’s CDS spreads tighten on week; Bausch paper lower

By Cristal Cody

Tupelo, Miss., Dec. 22 – Rite Aid Corp.’s paper remained soft on Thursday, a day after posting weak third-quarter results.

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/B) were down ¾ point during the session following an issuer upgrade from Fitch Ratings on the completion of the retailer’s tender offer for its 7½% issue.

The drugstore chain’s credit default swap spreads, meanwhile, improved more than 30 basis points this week.

Markets turned soft on Thursday as activity thins ahead of the holidays and year-end.

The S&P 500 index closed off 1.45%.

The iShares iBoxx High Yield Corporate Bond ETF fell 47 cents, or 0.62%, to $74.19.

Volatility was back up.

The CBOE Volatility index climbed about 9% to 21.87.

Weekly economic data was stronger. The Federal Reserve Bank of New York said Thursday its Weekly Economic index rose to a preliminary estimate of 1.19% for the week ended Dec. 17 from 0.72% in the prior week due to increases in retail sales, consumer confidence and fuel sales, among other factors.

In other distressed paper, Bausch Health Cos. Inc.’s 8½% notes due 2027 (Ca/CCC/CC) gave back 1 point.

Rite Aid softens

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/B) were trading down ¾ point on Thursday at 54¾ bid following an issuer upgrade from Fitch on the completion of its tender offer for its 7½% issue, a market source said.

On Wednesday, Rite Aid’s 7½% senior secured notes due 2025 (B3/CCC-/B) were quoted down ¾ point at 69½ bid after the retailer reported lower fiscal 2023 third-quarter revenue and wider quarterly losses.

Meanwhile, the Camp Hill, Pa.-based drugstore chain’s credit default swap spreads improved this week.

Rite Aid’s CDS spreads firmed 34 bps to 3,724 bps for the past week ended Wednesday, according to a Moody’s Investors Service report.

Bausch declines

Bausch’s 8½% notes due 2027 (Ca/CCC/CC) softened 1 point to trade at 52¾ bid in the secondary market on Thursday, a source said.

The bonds have declined about 1¾ points from the prior week.

Bausch plans to spin off unit Bausch + Lomb.

The Laval, Quebec-based health care and pharmaceutical company completed a distressed debt exchange in September.

Distressed returns up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns improved to 0.11% on Wednesday from minus 0.49% on Tuesday and minus 0.29% on Monday.

Month-to-date total returns were 0.29%, up from 0.18% on Tuesday but still down from 0.67% at the week’s start.

Year-to-date total returns were minus 25.23% on Wednesday, compared to minus 25.31% on Tuesday and minus 24.94% on Monday.

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