QVC paper gains; Digicel, Citizens improve; DISH lower; default rate forecast upped

By Cristal Cody

Tupelo, Miss., May 31 – Some distressed paper trended better in the secondary market on Wednesday across several sectors, sources reported.

QVC Inc.’s bonds were one of the day’s gainers with the paper up ¼ point or more.

In the distressed telecom space, Caribbean mobile phone provider Digicel Group Holdings Ltd.’s 8% senior bonds due 2025 (Ca//C) jumped 7 points.

The notes carried a yield of 60.9%.

Some high-grade financial paper carrying yields of nearly 200% also traded on Wednesday.

Citizens Financial Group, Inc.’s 6% fixed-to-floating rate perpetual preferred stock (Baa3/BB+/BB) improved more than 3¼ points by the close.

Stock indices declined less than 1% over the session ahead of an evening vote expected in the U.S. House of Representatives on a bill to raise the U.S. debt ceiling before a possible June debt default. The S&P 500 index closed down 0.6%.

The iShares iBoxx High Yield Corporate Bond ETF gave back 20 cents, or 0.27%, to $74.14.

The CBOE Volatility index retreated 1.37% to 17.22.

Meanwhile, DISH Network Corp.’s bonds slipped about ¼ point or more in strong trading volume on Wednesday.

The company’s 7¾% senior notes due 2026 (B3/B-) fell ¼ point.

The slide in DISH’s paper is helping to increase default concerns, according to market sources.

Default rates in the junk and leveraged loan markets are trending higher.

Fitch Ratings said on Tuesday it raised its 2023 U.S. high-yield bond default rate forecast to 4½% to 5% from 3% to 3½%.

“Since January, on a net basis, we have added $8.6 billion and $29.3 billion of bonds, respectively, to our Top Market Concern and Tier 2 Market Concern,” Fitch said. “Tier 2 bond list growth is largely due to the addition of DISH DBS ($15 billion of bond par value), Community Health ($12 billion) and Lumen Technologies ($6.6 billion).”

The leveraged loan default rate forecast also was increased to 4% to 4½% for 2023 from 2½% to 3%, Fitch said.

QVC stronger

QVC’s 5.45% senior secured first-lien notes due 2034 (B2/B-) rallied 1 point to 51¾ bid by the afternoon, a source said Wednesday.

The company’s 4¾% senior secured notes due 2027 (B2/B-) also went out more than ¼ point better around 61¼ bid, another source said.

The 2027 notes saw $4.8 million of volume.

Bonds from QVC and West Chester, Pa.-based owner Qurate Retail Inc. improved over the back half of May on the announcement of a divestiture of Zulily and a renewed focus on its core video commerce assets, which also include HSN.

Digicel rallies

Also Wednesday, Digicel Group’s 8% senior notes due 2025 (Ca//C) jumped 7 points to 44 bid, a source said.

Trading topped $1.5 million.

Fitch affirmed the company’s bond ratings on May 22.

The telecom provider is based in Kingston, Jamaica.

Citizens paper up

In other trading on Wednesday, Citizens Financial Group’s 6% series B fixed-to-floating rate perpetual preferred stock (Baa3/BB+/BB) improved more than 3¼ points by the close, a source said.

The $1,000-par preferreds were quoted with an 84 bid handle on $2 million of volume.

The yield was 188.6%.

Shares in the Providence, R.I.-based banking company fell 5.12% to $25.78.

DISH bonds dip

DISH DBS Corp.’s 7¾% senior notes due 2026 (B3/B-) softened ¼ point by the day’s end, going out with a 57 bid handle on more than $10 million of trading volume, a source said.

The bonds were up about ¾ point on Tuesday on more than $5 million of secondary activity.

DISH’s 5 7/8% senior notes due 2024 (B3/B-) also traded Wednesday down more than ¼ point at an 85 bid handle on nearly $7 million of volume.

The Englewood, Colo.-based satellite cable operator’s stock dropped more than 4% to $6.43.

Distressed index higher

S&P U.S. High Yield Corporate Distressed Bond index one-day returns improved in the first session of the holiday-shortened week to 0.55% on Tuesday, up from minus 0.08% on Friday and 0.17% in the same session a week ago.

Month-to-date total return losses narrowed to minus 0.09% on Tuesday from minus 0.63% ahead of the weekend.

Year-to-date total returns rose to 7.23% in the prior session from 6.65% on Friday.

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