AMC notes higher in heavy trading; QVC declines; Carvana lower; Adani notes slide

By Cristal Cody

Tupelo, Miss., Feb. 1 – AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CC) jumped close to 4½ points in heavy secondary trading that hit $33 million on Wednesday.

The bonds were among the most active distressed names traded, according to a market source.

In distressed retail paper, home shopping network owner QVC Inc.’s bonds also saw heavy secondary interest on Wednesday.

QVC’s 4¾% senior secured notes due 2027 (Ba3/B+) traded down nearly 2 points on more than $17 million of activity.

Carvana Co.’s notes gave back some gains made at the start of the week with the paper down about ¼ point to more than 2 points on Wednesday.

The 4 7/8% notes due 2029 (Caa2/CCC) shed 2½ points.

Market tone turned positive following the Federal Reserve’s widely expected rate hike to the benchmark interest rate of 25 basis points to the 4½% to 4¾% range.

The “end point for the cycle is likely to be a 5¼% Federal Funds rate,” according to a BNP Paribas note on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF gained 80 cents, or 1.05%, to $76.76.

The CBOE Volatility index was down nearly 8% at $17.87 at the close.

Defaults are expected to “accelerate” in 2023, according to a Moody’s Investors Service report on Wednesday.

“We expect the defaults to keep rising in the months ahead, with our forecast for the 12-month trailing default approaching nearly 6% by year-end – above the 4.7% long-term average – from a still-low 2% today,” Moody’s said.

Distressed exchanges are expected to remain high in 2023 with distressed debt exchanges accounting for nearly 70% of total defaults in 2022, 64% in 2021 and around 50% of total defaults in 2020, Moody’s said.

Adani Group remained in focus in the distressed market on Wednesday as the company canceled a share sale that closed on Tuesday in the wake of fraud allegations by a U.S. short seller.

Adani Green Energy Ltd.’s 4 3/8% senior secured notes due 2024 (Ba3) slid 12¼ points on more than $10 million of paper traded.

AMC bonds gain

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CC) rallied nearly 4½ points to 53½ bid on Wednesday in heavy trading that hit $33 million, a market source said.

In the prior session, the 10% notes traded 2 3/8 points better on $4.6 million of supply.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also climbed over 2¼ points to 61 bid on strong trading activity of $21.75 million on Wednesday.

The bonds were up 1½ points on Tuesday on nearly $12 million of volume.

AMC’s 5¾% notes due 2025 (Ca/CCC-) added 2¾ points to trade at 54¼ bid also on Wednesday. Secondary supply totaled $2.5 million.

The Leawood, Kan.-based movie theater owner and other properties announced Tuesday that Saudi Entertainment Ventures will buy out its $30 million investment in the Saudi Cinema Co. but will retain its licensing for use in Saudi Arabia.

QVC paper soft

QVC’s 4¾% senior secured notes due 2027 (Ba3/B+) traded down nearly 2 points to 74 bid in strong secondary activity on Wednesday, a source said.

The notes saw $17.6 million of volume.

QVC is operated by West Chester, Pa.-based media company Qurate Retail, formerly known as Liberty Interactive Corp.

Carvana moves down

Carvana’s paper was moving lower in steady trading action over the session, a source said.

The 4 7/8% notes due 2029 (Caa2/CCC) shed 2½ points to trade at 42¼ bid on $8 million of volume.

The bonds had climbed 4 points to 45½ bid on $4 million of trading Monday.

Carvana’s 10¼% senior notes due 2030 (Caa2/CCC) fell more than ¼ point to 53½ bid going out Wednesday, the source said.

Supply was steady at $4 million.

The issue had rallied nearly 7½ points to trade at 55½ bid on $13.47 million of volume on Monday.

Carvana’s stock shot up more than 30% on Wednesday to close at $13.56 on about 76 million shares traded.

The Phoenix-based online car retailer will release fourth-quarter and fiscal 2022 results on Feb. 23.

Adani bonds drop

In other paper, Adani Green Energy’s 4 3/8% senior secured notes due 2024 (Ba3) sank 12¼ points on Wednesday to 66¾ bid, a market source said.

Trading hit $11.5 million.

The issue went out Tuesday up 7½ points at 79 bid on $3.5 million of volume.

Adani’s paper has been volatile in the wake of fraud allegations against the India-based renewable energy company by U.S.-based firm Hindenburg Research.

The short seller on Jan. 24 published its findings of an investigation into the company. Adani responded on Sunday with a 413-page rebuttal that was then followed by a detailed response from Hindenburg.

The bonds have declined from trading with a handle in the 90s ahead of the report’s release.

On Wednesday, Adani Enterprises Ltd. reported that the board decided to not proceed with its public offer of equity shares, which was fully subscribed and closed on Tuesday, given the “unprecedented situation and the current market volatility.”

Adani chairman Gautam Adani said in a release on Wednesday that the stock price had fluctuated over the day and going ahead with the offering would not be “morally correct,” so the company will refund proceeds.

Distressed index declines

S&P U.S. High Yield Corporate Distressed Bond index one-day returns fell to minus 0.04% on Tuesday from 0.12% on Monday.

January returns ended Tuesday at 7.99%, down from 8.03% on Monday.

Year-to-date total returns dropped to 7.99% on Tuesday from 8.03% at the start of the week.

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