Coinbase recovers some losses; Michaels, Qurate distressed retail up; Lumen, Level 3 rise

By Cristal Cody

Tupelo, Miss., June 7 – Coinbase Global, Inc.’s bonds improved nearly ½ point to 1 point in lighter trading on Wednesday after Tuesday's surprise announcement from the Securities and Exchange Commission that it charged the crypto company with operating as an unregistered national securities exchange, broker and clearing agency.

Coinbase’s 3 3/8% senior notes due 2028 (B1/B), which slid 4 points on nearly $42 million of trading on Tuesday, were up nearly ½ point on $15.5 million of volume on Wednesday.

Stocks finished the session mixed with the Nasdaq down 1.29% and the S&P 500 index off 0.38%.

The “Fear Factor” index continued to move to its lowest levels since before the pandemic.

The CBOE Volatility index fell 0.24% to 13.94.

The iShares iBoxx High Yield Corporate Bond ETF shed 41 cents, or 0.55%, to $74.23.

Distressed paper from Michaels Cos, Inc., Qurate Retail Inc., Lumen Technologies, Inc. and subsidiary Level 3 Financing, Inc. rallied on Wednesday, sources reported.

Michaels Stores’ 7 7/8% senior notes due 2029 (Caa2/CCC) traded about 1¾ points to 2¼ points better.

The issue has gained about 4½ points this week.

Paper from QVC Inc. parent Qurate Retail was up about 1 point, a source said.

Lumen Technologies’ 4% senior secured notes due 2027 (B3/BB-) were one of the day’s most active distressed issues, a source said.

The notes improved 1¼ points on more than $11 million of volume.

Level 3 Financing’s 4¼% senior notes due 2028 (B1/B) traded ½ point better over the session.

Coinbase improves

Coinbase’s paper took back some of Tuesday’s losses in lighter secondary action on Wednesday, a source said.

The 3 3/8% senior notes due 2028 (B1/B) went out nearly ½ point better at a print of 60.437 on $15.5 million of trading.

On Tuesday, the notes dropped 4 points to 60¼ bid on nearly $42 million of volume.

Coinbase’s paper declined about 2¾ points to 4 points on about $70 million of volume following the SEC announcement.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Coinbase violated certain registration provisions of the Securities Exchange Act of 1934 and securities offering registration provisions of the Securities Act of 1933.

Coinbase’s stock (Nasdaq: COIN) recovered 3.2% on Wednesday to close at $53.26 after declining 12.09% in the prior session.

Michaels paper higher

Michaels Stores’ 7 7/8% senior notes due 2029 (Caa2/CCC) climbed 2¼ points to 66 bid by late afternoon, a source said.

The notes were quoted after the close up about 1¾ points at the 65¾ bid area on $4.2 million of secondary action.

The issue has gained about 4½ points this week.

The Irving, Tex.-based arts and crafts retailer was taken private in 2021 by funds managed by Apollo Global Management, Inc. affiliates.

Lumen bonds stronger

Trading action picked up on Wednesday in Lumen Technologies’ 4% senior secured notes due 2027 (B3/BB-), which went out 1¼ points better on more than $11 million of paper changing hands, a source said.

The bonds were quoted at 69 bid.

Paper from Lumen subsidiary Level 3 Financing also finished mostly higher on the day.

Level 3 Financing’s 4¼% senior notes due 2028 (B1/B) traded ½ point better at 61 bid on $5 million of volume.

The Denver-based telecommunications company’s stock (NYSE: LUMN) improved 2.22% to $1.84.

Distressed index declines

S&P U.S. High Yield Corporate Distressed Bond index one-day returns declined to 0.19% on Tuesday from 0.47% at the start of the week.

Month-to-date total returns were higher at 1.89% in the prior session versus 1.69% on Monday.

Year-to-date total returns rose to 8.65% on Tuesday from 8.45% on Monday.

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