First Republic Bank paper down; Rite Aid, WeWork notes hold onto gains; QVC declines

By Cristal Cody

Tupelo, Miss., April 18 – Earnings reports, including from major and regional banks, swamped market news on Tuesday with secondary action in the distressed space mostly light, sources reported.

A lot of paper across the high-grade and junk markets already has retraced the wides from March following the collapse of Silicon Valley Bank and other banks, though “bank spreads continue to lag,” according to a BofA Securities analysts note.

CCC-rated high-yield bonds, agency mortgage-backed securities and high-grade Yankees also haven not retraced a majority of the moves wider, the note said.

First Republic Bank’s 4 3/8% subordinated notes due 2046 (B2/B-) declined nearly 1¼ points on Tuesday and were quoted down about 12 points from a week ago.

Stocks were mixed by the end of the day on the slew of earnings reports.

The S&P 500 index stood out with a 0.09% gain, while other indices edged lower.

The iShares iBoxx High Yield Corporate Bond ETF added 3 cents, or 0.05%, to $75.11.

Volatility continued to retreat with the CBOE Volatility index down 0.59% at 16.85.

BNP Paribas Securities Corp. analyst Meghan Robson said in a note that first-quarter estimates for the transportation, banking and energy sectors are showing positive growth.

“Our focus this reporting season is on weakness from lower-rated credits and guidance as expectations show fading earnings growth,” Robson said.

Rite Aid Corp.’s paper remained stronger during the session. The 7½% senior secured notes due 2025 (Caa3/CCC-) held onto Monday’s gains of 1½ points and added 3½ more points on Tuesday.

WeWork Inc.’s 7 7/8% senior notes due 2025 (CC) also held onto Monday’s gains of 3 points and improved further on Tuesday. The paper added more than 3 points by the close.

Home shopping network QVC Inc.’s 4 3/8% notes due 2028 (B2/B-) were among the most active distressed issues seen trading over the session, a source said.

The notes fell more than 1 point on $4.4 million of volume.

First Republic declines

First Republic Bank’s 4 3/8% subordinated notes due 2046 (B2/B-) declined nearly 1¼ points to 40¼ bid on $1.5 million of trading on Tuesday, a source said.

The issue has dropped more than 10 points from a week ago.

The notes were quoted at 52 bid, 54 offered the same day last week.

First Republic Bank, cut to junk ratings in March, will release its first-quarter earnings report on April 24.

On March 16, 11 major banks announced they would make $30 billion of deposits into First Republic as depositors fled regional banks.

The San Francisco-based bank’s stock dropped 4.26% on Tuesday to $12.58.

Rite Aid moves up

Rite Aid’s 7½% senior secured notes due 2025 (Caa3/CCC-) rallied 3½ more points to head out at 64½ bid on Tuesday following gains on Monday, a source said.

Trading was on the light side on $1 million of volume.

Rite Aid’s paper added 1½ points in the prior session.

The Camp Hill, Pa.-based drugstore chain will report fiscal year 2023 fourth-quarter earnings on Thursday.

Rite Aid’s stock was off 4.18% on the day at $2.52.

WeWork stronger

WeWork’s 7 7/8% senior notes due 2025 made further inroads on Tuesday and climbed 3 1/8 points to head out at 46¼ bid, a market source said.

The notes registered more than $1 million of paper traded.

The notes were quoted in the same session a week ago at 43 bid, 44 offered.

WeWork’s bonds gained 3 points in Monday’s session.

The company announced Monday the early tender results for its exchange offers and consent bids for two tranches of notes along with plans to issue additional shares of its class A common stock and warrants.

WeWork reported Tuesday that it received notice on April 12 from the New York Stock Exchange of non-compliance with its minimum share price after the average closing price of its stock fell below $1 per share over a consecutive 30-trading-day period.

WeWork’s stock hit new consecutive record lows in the prior week.

The company said it intends to cure the deficiency.

Shares improved 1.36% on Tuesday to 49 cents.

The New York-based office share company will release first-quarter earnings results on May 9.

QVC notes slip

QVC’s 4 3/8% senior secured notes due 2028 (B2/B-/B+) were among the most active distressed issues seen trading on Tuesday, according to a market source.

The notes fell more than 1 point to a print of 52.969 on $4.4 million of volume.

West Chester, Pa.-based parent company Qurate Retail Inc. will release first-quarter earnings results on May 5.

Qurate Retail’s shares traded down 4.76% over the day to 79 cents.

Distressed index soft at start

S&P U.S. High Yield Corporate Distressed Bond index one-day returns softened at the start of the week to minus 0.06% on Monday.

Returns were down from 0.34% on Friday and 0.06% in the same session a week ago.

Month-to-date returns fell to 1.61% on Monday from 1.66% on Friday but were up from minus 0.11% in the week-ago session.

Year-to-date total returns dipped to 6.2% at the week’s start from 6.26% ahead of the weekend but stronger than 4.41% the same day a week ago.

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