Coinbase notes gain after downgrade; AMC uptrend continues; Rackspace paper mixed

By Abigail W. Adams

Portland, Me., Jan. 12 – The distressed debt space continued to benefit from the market’s renewed risk-on sentiment with the December Consumer Price Index report doing little to dampen sentiment.

The report fell in line with expectations and supported the market’s bet that the Federal Reserve will raise interest rates by 25 basis points on Feb. 1, sources said.

The S&P U.S. High Yield Corporate Distressed Bond index gained another 0.88% on Thursday with year-to-date gains now 5.88%.

AMC Entertainment Holdings, Inc.’s junk bonds continued their strong uptrend on Thursday with the 10% senior secured second-lien notes due 2026 (Caa3/CC) continuing to add in heavy volume.

Coinbase Global, Inc.’s junk bonds (Ba2/BB-) also extended their uptrend despite a recent ratings downgrade.

Rackspace Technology Global Inc.’s junk bonds made an appearance on the tape on Thursday with the cloud computing company’s unsecured notes lower while its secured paper moved higher.

AMC’s improves

AMC’s 10% senior secured second-lien notes due 2026 continued to add in heavy volume on Thursday with the ailing movie theater operator lifted by the broader market rally.

The 10% notes gained another 1 point to return to a 49-handle.

The notes closed Thursday at 49½ with the yield now 37.38%, according to a market source.

There was $25 million in reported volume.

The notes jumped 3 points the previous session.

AMC’s stock has surged over 26% during the past two sessions with the meme stock short-squeeze trade in full effect, a source said.

Bed Bath & Beyond Inc.’s stock and bonds have also been on an upswing over the past week although a bankruptcy filing is largely expected within weeks.

The 3.749% senior notes due 2024 (C/C) rose another 2 points to close Thursday at 12.

The notes have pared their losses since plummeting 16 points after issuing a bankruptcy warning last week.

The notes are now off 10 points from levels seen prior to bankruptcy talk emerging.

Bed Bath & Beyond’s stock has jumped 261% over the past week with stock well above its levels since before warning of a bankruptcy.

Coinbase gains

Coinbase’s junk bonds continued their strong uptrend on Thursday with the notes eliminating their losses from the previous week to mark gains since the start of the year.

Coinbase’s 3 3/8% notes due 2028 rose another 1 point with the notes trading in the 59 7/8 to 60 1/8 context heading into the market close.

The notes have added 5 points over the past two weeks.

The crypto-exchange’s 3 5/8% senior notes due 2031 also climbed 1 point to close Thursday at 54¾.

The notes have also gained about 5 points over the past two weeks.

The notes were on the rise despite an S&P Global Ratings rating downgrade.

S&P recently lowered Coinbase’s issuer credit rating and unsecured debt to BB- from BB citing expectations for weak profitability amid lower crypto trading volume, Prospect News reported.

However, S&P also cited the company’s cash cushion and low-risk profile as a balance to the headwinds the company faces.

While Coinbase’s notes have been under pressure during individual sessions as bankruptcy news swirls around crypto companies, the notes have been on a strong uptrend over the past week.

Rackspace on the tape

Rackspace’s junk bonds were on the tape on Thursday with its secured notes lifted while its unsecured notes fell.

The cloud computing company’s 3½% senior secured notes due 2028 (B1/B-) rose 2½ points in light volume to close the day at 64 with the yield 13½%.

The 5 3/8% senior notes due 2028 (Caa1/CCC+) fell 1 point to close the session at 43 with the yield about 24%.

The movement in the notes may have been the result of holders attempting to move their position up the capital structure, a source said.

© 2015 Prospect News.
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