Michaels heads out flat in strong supply; QVC paper gains; Level 3, Lumen notes active

By Cristal Cody

Tupelo, Miss., July 5 – Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC) traded flat in strong secondary volume that put the distressed notes among the most active junk names traded on Wednesday.

Bonds from home shopping network QVC Inc. picked up about ½ point to 2½ points over the day in mostly light trading action.

QVC’s notes saw the best gains in the distressed space over the session, according to a market source.

Paper from Lumen Technologies, Inc. subsidiary Level 3 Financing, Inc. also was among the most active distressed bonds changing hands during the session.

Level 3 Financing’s 4 5/8% senior notes due 2027 (B1/B) fell ½ point.

Parent Lumen Technologies’ 5 1/8% senior due 2026 (Caa1/CCC+) also were active in lighter trading over the session.

Risk-on tone rose in the first session back after Monday’s early close and Fourth of July holiday on Tuesday with volatility higher and stock indices all lower after the release of the minutes from the Federal Reserve’s June policy meeting.

The S&P 500 index slipped 0.2%.

The iShares iBoxx High Yield Corporate Bond ETF fell 23 cents, or 0.31%, to $74.32.

The CBOE Volatility index increased 3.5% to 14.18.

Nearly three quarters of North American sectors maintain a deteriorating outlook for 2023 with a shallow U.S. recession forecast for the fourth quarter and first quarter of 2024, Fitch Ratings reported Friday.

“There are no mid-year changes to our sector outlooks except for U.S. REITs, for which we changed the sector outlook to deteriorating from neutral, taking into account further tightening of commercial real estate lending conditions amid ongoing valuation pressure and macro headwinds,” Fitch said.

Michaels’ paper active

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC) went out Wednesday at 67¾ bid, unchanged from Monday, a market source said.

The bonds, carrying a nearly 17% yield, were the most active distressed issue seen moving during the session on trading supply that totaled $11.25 million.

Michaels’ paper was down 1 point on Monday.

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 4¾% notes due 2027 (B2/B-) rallied 2½ points by Wednesday’s close to 66¼ bid after softening ahead of the holiday closure, a source said.

Trading was on the light side with $3.85 million of activity.

The bonds had declined ¾ point in the early session on Monday.

The company’s 4.45% notes due 2025 (B2/B-) added ½ point to a quote of 88 bid in thin trading Wednesday after dropping 1 point at the start of the week.

West Chester, Pa.-based parent Qurate Retail Inc.’s stock (Nasdaq: QRTEA) dropped 9 cents, or 8.11%, on the day to $1.02.

Level 3, Lumen active

Level 3 Financing’s 4 5/8% senior notes due 2027 (B1/B) fell ½ point to 69½ bid on $8.8 million of trading on Wednesday, a source said.

The bonds were up about ¼ point from where the paper traded in the prior week.

Parent Lumen Technologies’ 5 1/8% senior due 2026 (Caa1/CCC+) were quoted at 69½ bid on $2.7 million of secondary volume over the day.

The issue was down 1 point from where the paper traded in the same session a week ago at 70½ bid.

Lumen reported on Monday that it will post its second-quarter earnings results on Aug. 1.

Shares (NYSE: LUMN) in the Denver-based telecommunications company rose 1 cent, or 0.44%, on Wednesday to $2.26.

Index positive

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns remained positive in the early session on Monday at 0.12%, down from 0.46% on Friday but up from minus 0.17% in the same session last week.

Year-to-date distressed total returns improved on Monday to 11.76% compared to 11.63% ahead of the weekend and 10.39% on the same day a week ago.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.