DISH bonds dip, CDS spreads gap out; Qurate, QVC improve; Rite Aid softens

By Cristal Cody

Tupelo, Miss., March 9 – DISH Network Corp.’s credit default swap spreads gapped out more than 1,300 basis points this week, while its bonds were “not too bad” in heavy secondary trading Thursday, a source said.

The 7 3/8% senior notes due 2028 (B3/B) softened about 1 point.

Home shopping network owner Qurate Retail Inc.’s paper saw improvement, though its CDS spreads continued to decline this week. The issuer’s CDS spreads widened another 428 bps after moving out 413 bps in the prior week.

Qurate Retail’s 8¼% notes due 2030 (B3/CCC) traded 2½ points higher on Thursday, while subsidiary QVC Inc.’s 4 3/8% senior secured notes due 2028 (Ba3/B+) also saw gains of more than 1 point over the session.

The company “has seen its customer base shrink due to supply chain disruptions and other macro headwinds,” Jason Haas, an analyst at BofA Securities Inc., said in a March 1 note. “Although the company is instituting a turnaround, we're concerned that it will be difficult to win back customers. And reinvestment in the business may be limited due to high debt levels.”

Rite Aid Corp. also continued to stay under pressure this week. The drugstore chain’s bonds are “trading garbage,” a source said Thursday.

Rite Aid’s CDS spreads eased nearly 200 bps over the past week ended Wednesday.

One of the most active distressed names traded Thursday was AMC Entertainment Holdings, Inc., sources said.

“No real price movement – just active,” one source reported.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were seen trading about 1½ points higher on the day and about ½ point better on the week.

Outside of the usual distressed names, SVB Financial Group found itself on the defensive with its stock sinking more than 60% and it paper down about 5½ points to more than 8 points after the company announced it sold almost all of its securities portfolio at a loss of $1.8 billion and plans to price common stock and mandatory convertible preferred stock offerings.

SVB’s 4% split-rated perpetual securities (Baa3/BB) dropped 8¾ points to 64¾ bid on nearly $16.5 million of trading on Thursday, a source said.

The stock market turned bleak ahead of the release on Friday of widely anticipated job data.

Market participants are growing resigned to the high likelihood of a 50 basis point rate hike this month following Federal Reserve chairman Jerome Powell’s Congressional testimony on Tuesday.

“Nobody likes that,” a market source noted.

The Labor Department will release the February employment report on Friday.

The CBOE Volatility index jumped more than 17% to $22.40 by Thursday’s close.

Stock indices fell as much as 2.81%. The S&P 500 index closed down 1.85%.

The iShares iBoxx High Yield Corporate Bond ETF declined 37 cents, or 0.5%, to $73.47.

Distressed index returns have been under pressure since Monday’s gains with the S&P U.S. High Yield Corporate Distressed Bond index posting negative returns in the last two sessions.

DISH paper softens

DISH’s CDS spreads moved out 1,317 bps for the past week ended Wednesday to 1,474 bps, according to a Moody’s Investors Service report on Thursday.

DISH’s CDS spreads for the week ended March 1 were 157 bps.

The Englewood, Colo.-based satellite cable operator’s bonds were trading mostly flat on the day on $40 million of volume on no major news, a source said.

DISH has several tranches of secured bonds trading in the 90s or higher that saw the most action Thursday, while three tranches of senior notes were moving on handles in the 60s or lower.

The 7 3/8% senior notes due 2028 (B3/B) softened to 66 bid, 66½ offered from 67 bid, 67½ offered on Wednesday, the market source said.

DISH’s 5 1/8% senior notes due 2029 also declined on Thursday to 57 bid, 58 offered from 57½ bid, 58½ offered in the prior session.

“The stock’s up 9 cents,” the source said.

DISH’s shares closed the day 0.8% better at $11.29.

Qurate, QVC bonds up

Qurate Retail’s bonds saw gains Thursday in light trading, while the distressed company’s CDS spreads moved out more than 400 bps this week, market sources said.

The company’s 8¼% notes due 2030 (B3/CCC) traded 2½ points higher at 38 bid on $2 million of secondary supply.

CDS spreads for Qurate, formerly known as Liberty Interactive Corp., widened 428 bps to 3,453 bps for the week ended Wednesday, according to a Moody’s report. The company’s CDS spreads softened 413 bps to 3,025 bps in the prior week.

QVC’s 4 3/8% senior secured notes due 2028 (Ba3/B+) also saw gains on Thursday on heavier trading totaling $5.8 million, a source said. The notes went out more than 1 point higher around the 48¾ bid area.

The West Chester, Pa.-based parent reported fourth-quarter and fiscal 2022 losses in the prior week.

Rite Aid weakens

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/CCC) declined further in secondary trading on Thursday to 49½ bid, 50½ offered from 51 bid, 52 offered the previous day, a source said.

Rite Aid’s CDS spreads also eased 198 bps to 4,899 bps over the past week ended Wednesday, Moody’s said.

The Camp Hill, Pa.-based drugstore chain’s stock closed Thursday down about 5% at $3.31.

AMC notes gain

AMC’s bonds were moving higher in active distressed trading over the day, according to market sources.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) traded about 1½ points better at 53½ bid, 54½ offered.

The notes were up about ½ point on the week.

AMC Entertainment’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also were trading more than 1 point better in the 62 bid area on $12 million of volume.

The issue was about ¼ point better on the week.

The Leawood, Kan.-based movie theater owner completed a distressed debt-for-equity swap in February.

Distressed returns lower

S&P U.S. High Yield Corporate Distressed Bond index one-day returns moved lower midweek to minus 0.35% from minus 0.23% on Tuesday and up 0.57% on Monday.

Month-to-date returns improved to 0.14% on Wednesday from 0.5% in the prior session, while quarterly and year-to-date total returns softened to 9.26% from 9.65% on Tuesday.

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