iHeartMedia improves; distressed paper from Michaels, QVC, Rite Aid higher; Level 3 up

By Cristal Cody

Tupelo, Miss., June 12 – iHeartMedia, Inc.’s 8 3/8% senior notes due 2027 (Caa1/B-) took a major portion of junk and distressed trading action on Monday.

The bonds were up ¼ point on more than $20 million of secondary volume as the most active distressed name quoted.

iHeartMedia’s notes climbed more than 10 points in the prior week.

Elsewhere, distressed retail paper saw gains on Monday.

Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC) traded 1 point better over the session and have picked up more than 6 points from a week ago.

QVC Inc.’s 5.45% senior secured first-lien notes due 2034 (B2/B-) were 1 point higher.

Also, Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/CCC-/CCC) added ½ point over the day.

Stocks were stronger on Monday, though volatility was drifting higher ahead of the Consumer Price Index release on Tuesday and the Federal Reserve’s rate decision due Wednesday.

The Nasdaq rallied 1.53%.

The iShares iBoxx High Yield Corporate Bond ETF dipped 5 cents, or 0.07%, to $74.67.

The CBOE Volatility index moved up 8.53% to 15.01 after falling to its lowest level since February 2020 in the prior week.

In addition to the Federal Reserve’s decision this week, the European Central Bank also meets on Thursday, and the Bank of Japan meets on Friday.

Paper from Lumen Technologies, Inc. subsidiary Level 3 Financing, Inc. gained over the session.

Level 3 Financing’s 4¼% senior notes due 2028 (B1/B) were up 1¼ points by early afternoon and improved by the close to head out 1½ points better.

The S&P U.S. High Yield Corporate Distressed Bond index finished the prior week with year-to-date total returns of more than 10% on Friday.

Distressed returns, so far, have bested other junk index returns, including the S&P U.S. HY Corporate Bond index, which had a year-to-date total return on Friday of 4.57%.

The prior week saw five defaults, with two coming from the U.S. telecommunications sector, according to a release Monday from S&P Global Ratings.

iHeartMedia active

iHeartCommunications, Inc.’s 8 3/8% senior notes due 2027 (Caa1/B-) traded ¼ point higher on Monday at 71 bid in heavy secondary action that put it among the most active junk names, a source said.

The notes saw $20.26 million of trading.

iHeart’s bonds finished the prior week more than 10 points better after going out on Friday 1¾ points better at 70¾ bid on $8.8 million of volume.

The San Antonio-based media broadcasting company’s stock rose 3.67% to $3.67 on Monday.

Michaels continues climb

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC) went out 1 point higher on Monday at 69 bid, a source said.

The bonds have rallied from where the issue traded a week ago at 62½ bid.

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

QVC bonds up

QVC’s 5.45% senior secured first-lien notes due 2034 (B2/B-) recovered 1 point in trading on Monday after shedding more than 4 points in the prior week, a source said.

The bonds were up at 49¾ bid.

The issue was last seen Thursday down 4¼ points with a 48 bid handle.

Parent Qurate Retail Inc.’s stock (Nasdaq: QRTEA) closed down 5.88% at 95 cents.

The West Chester, Pa.-based company reported in late May it divested a subsidiary and will focus on its core video commerce assets, including QVC and HSN.

Rite Aid improves

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/CCC) were quoted ½ point better in the distressed space on Monday.

The notes traded at 54¼ bid, a source said.

Rite Aid’s credit default swap spreads widened more than 200 basis points in the prior week.

The Camp Hill, Pa.-based drugstore chain’s stock closed Monday down 1.1% at $1.80.

Level 3 higher

Level 3 Financing’s bonds picked up about 1½ points to more than 2 points in mostly light trading on Monday, according to market sources.

The company’s 4¼% senior notes due 2028 (B1/B) added 1½ points by the close to head out at 65¼ bid.

The issue has improved 4 points from where it was quoted a week ago.

Level 3 Financing’s 3 5/8% senior notes due 2029 (B1/B) also traded more than 2 points higher on Monday at 60 bid.

Level 3’s notes, along with paper from parent Lumen, gained over the prior week following the release of positive investor updates.

Lumen’s 6 7/8% debentures due 2028 (Caa1/CCC+) declined on Monday by more than 2½ points to around 47½ bid in thin trading.

The Denver-based telecommunications company’s stock finished 1.67% higher at $1.83.

Distressed returns positive

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns stayed positive on Friday at 0.36%.

One-day returns over the prior week were the strongest on Thursday at 0.67%, compared to 0.26% on Wednesday, 0.19% on Tuesday and 0.47% in the week’s first session.

Month-to-date total returns finished the week at 3.21%, up from 2.84% on Thursday, 2.15% on Wednesday, 1.89% on Tuesday and 1.69% at the prior week’s start.

Year-to-date total returns climbed to 10.07% on Friday from 9.67% on Thursday, 8.94% at midweek, 8.65% on Tuesday and 8.45% at the start of the week.

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