Distressed trading thins; DISH better; Bed Bath & Beyond paper moves lower; Staples flat

By Cristal Cody

Tupelo, Miss., June 30 – DISH Network Corp.’s bonds traded about ½ point higher in the most active distressed name seen Friday on volume totaling under $10 million, a source said.

“It’s very quiet,” a source said.

Overall junk trading was on the light side with fewer distressed issues active as desks thinned by lunch ahead of next week’s early market close on Monday and Independence Day holiday on Tuesday.

Monday could see some secondary action.

“I don’t know what to expect,” a trader said. “There might be some trading; otherwise, it’s going to pick up again on Wednesday. Guys that have names that have performed well, they have just been holding them.”

Market tone remained strong headed into the weekend.

Stocks indices all closed higher on Friday.

The S&P 500 index rallied 1.23%.

The iShares iBoxx High Yield Corporate Bond ETF rose 36 cents, or 0.48%, to $75.07.

Market volatility was slightly higher on the day.

The CBOE Volatility index rose 0.37% to 13.59.

Bankrupt Bed Bath & Beyond Inc.’s bonds remained active in the distressed space following the company’s sale of some of its assets on Tuesday and Thursday.

In addition, “I’ve seen a couple of BWICs, various small pieces,” a source said.

Bed Bath & Beyond’s 5.165% senior notes due 2044 declined ¾ point on $1 million of bonds changing hands on Friday.

Staples Inc.’s 10¾% senior notes due 2027 (Caa2/CCC+) also were among the most active names during the session but went out flat.

Bonds trading in the distressed space overall capped off the week lower, according to BofA Securities credit strategist Oleg Melentyev on Friday.

“Distressed paper remained weak, whereas non-distressed CCCs and BBs held in stronger,” Melentyev said in a research note. “Better bid: real estate, food, travel, cap goods; better offered: cable, chemicals, tech, telecoms.”

DISH bonds higher

DISH DBS Corp.’s 7¾% senior notes due 2026 (B3/B-) headed into the weekend up nearly ½ point and trading on a 61 bid handle on Friday, a source said.

The issue was among the most active distressed bonds seen during the session on $9.4 million of volume.

DISH’s 5 1/8% senior notes due 2029 (B3/B-) added more than ½ point over the day to trade around 46¾ bid in lighter supply totaling $2.6 million.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) softened 1.49% on Friday to $6.59.

Bed Bath & Beyond active

Bed Bath & Beyond’s 5.165% senior notes due 2044 declined ¾ point on Friday to 1¼ on $1 million of paper traded, a source said.

“It is down 75 cents from the last print,” the source said.

The bonds traded as high as 3½ bid in early June.

Earlier this week, the company received approval to sell its intellectual property for $21.5 million to stalking horse bidder Overstock.com, Inc., according to an order filed Tuesday with the U.S. Bankruptcy Court for the District of New Jersey.

The sale did not include Bed Bath & Beyond’s stores or its buybuy Baby assets.

A notice was filed Thursday that Bed Bath & Beyond named Dream on Me Industries, Inc. as the winning bidder for its buybuy Baby intellectual property assets, but the deal is not set since it is subject to a better offer with another auction scheduled for July 7.

The Union, N.J.-based home products retailer filed for Chapter 11 bankruptcy in April.

Staples unchanged

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) traded flat on Friday at 58 3/8 bid in one of the day’s more active distressed issues, a source said.

The bonds saw $6.8 million of activity.

Staples is a Framingham, Mass.-based office products retail company owned by private equity firm Sycamore Partners.

Distressed index slips

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined on Thursday to 0.06% from 0.36% on Wednesday and 0.24% on Tuesday, but remained up from minus 0.17% on Monday.

Month-to-date total returns were higher on Thursday at 4.2% versus 4.13% midweek, 3.76% on Tuesday and 3.51% at the start of the week.

Year-to-date distressed total returns improved to 11.12% on Thursday, compared to 11.05% on Wednesday, 10.66% on Tuesday and 10.39% on Monday.

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