Community Health secured notes improve; Bausch Health bonds better; Rite Aid perks up

By Cristal Cody

Tupelo, Miss., June 20 – Distressed health care paper traded higher on Tuesday in the first session back after the long holiday weekend.

Community Health Systems Inc.’s 6 7/8% senior secured notes due 2029 (Caa2/CCC-) have gained about 3¾ points over the past week. The notes edged up ¼ point on Tuesday.

Bausch Health Cos. Inc.’s paper also continued to improve.

The 8½% senior secured notes due 2027 (Caa1/CCC+/B) have picked up about ½ point to ¾ point since Friday.

Stocks moved lower during the session ahead of Federal Reserve chairman Jerome Powell’s Congressional testimony scheduled to start Wednesday.

The S&P 500 index shed 0.47%.

The iShares iBoxx High Yield Corporate Bond ETF fell 20 cents, or 0.27%, to $74.73.

Measured market volatility remained low over the session. The CBOE Volatility index declined 2.18% to 13.88.

Market focus is expected to shift on Wednesday to Powell’s testimony before the U.S. House Financial Services Committee and on Thursday to Powell’s testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs.

Meanwhile, Rite Aid Corp.’s paper also was slightly higher on Tuesday after the issuer’s bonds and credit default swap spreads came under renewed pressure in the prior week.

The 8% senior secured notes due 2026 (Caa3/CCC-/CCC) added ¼ point by the close and have recovered about 1¼ points since Thursday.

Elsewhere, KBRA reported Tuesday that a few direct lenders joined its May default list.

Four names joined the non-sponsored direct lending default list for $410 million, versus two sponsored companies at about $300 million.

“Sponsored and non-sponsored volume totaled $2.7 billion last month,” KBRA said. “Since May, another sponsored deal has joined the ranks, taking the aggregate year-to-date tally to $3 billion. By comparison, syndicated loan defaults total $34.6 billion year to date, with high yield at $21.4 billion.”

KBRA plans to add a direct lending deals default index and watchlist in July.

Community Health better

Community Health’s 6 1/8% secured notes due 2030 (Caa2/CCC-) edged up ¼ point in trading on Tuesday but have gained about 3¾ points over the past week, a source said.

The notes were quoted trading on Tuesday at 62¼ bid.

The bonds were seen in the same session a week ago at 58½ bid.

Shares (NYSE: CYH) in the Franklin, Tenn.-based operator of acute care and outpatient facilities declined 1.42% on Tuesday to $4.16.

Bausch paper up

Bausch Health Americas, Inc.’s 8½% senior secured notes due 2027 (Caa1/CCC+/B) have added about ½ point to ¾ point since Friday, a source said Tuesday.

The notes went out at 55¼ bid after trading Friday unchanged at 54½ bid.

The Laval, Quebec-based pharmaceutical company’s stock (NYSE: BHC) closed up 0.68% to $7.40.

Rite Aid improves

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) traded ¼ point better on Tuesday at 52¾ bid but have improved more than 1 point since Thursday, a source reported.

The bonds were quoted on Thursday trading around 51½ bid, 52½ offered. The issue remained down from trading at 54 bid, 55 offered at the start of the previous week.

The retailer’s CDS spreads moved out 1,301 basis points over the prior week ended Wednesday to 7,326 bps, according to a Moody’s Investors Service report.

Rite Aid is scheduled to post its fiscal 2024 first-quarter results on June 29.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) finished up 1 cent, or 0.54%, to $1.85.

Distressed index

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Friday to 0.41%, compared to 0.01% on Thursday, 0.6% on Tuesday and 0.28% at the start of the previous week.

One-day total returns were highest midweek at 0.47% on Wednesday.

Month-to-date total returns ended Friday better at 5.05% versus 4.62% on Thursday, 4.61% on Wednesday, 4.12% on Tuesday and 3½% at the week’s start.

Year-to-date distressed total returns climbed to 12.03% from 11.57% on Thursday, 11.56% on Wednesday, 11.04% on Tuesday and 10.37% in the first session of the week.

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