Rite Aid paper rallies; CommScope notes erode; QVC paper moves up; Carvana lower

By Cristal Cody

Tupelo, Miss., Aug. 4 – Rite Aid Corp.’s paper climbed on Friday in strong secondary action that put the drugstore chain’s distressed paper among the most active junk bonds traded during the session.

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) rallied more than 2 points on $15 million of volume.

Bonds from Rite Aid and CommScope Holding Co., Inc. saw the heaviest interest in the distressed secondary market during the session, sources reported.

CommScope’s notes slipped further on Friday and were trading about 10 points lower from midweek before it released its second-quarter results.

The 8¼% senior notes due 2027 (Caa1/CCC+) were down 5/8 point on Friday on $11 million of volume.

Stocks went into the weekend weak a third day since Fitch Ratings’ downgrade Tuesday of the United States to AA+ from AAA.

Equities saw outflows of $3.19 billion over the past week ended Wednesday from inflows of $10.69 billion in the prior week, according to a BofA Securities note.

The CBOE Volatility index went out 7.441% higher at 17.10.

The S&P 500 index, down 1.38% on Wednesday and 0.25% on Thursday, closed Friday 0.53% lower.

Risk-on tone rose following a strong jobs report with the iShares iBoxx High Yield Corporate Bond ETF up 44 cents, or 0.59%, to $74.65.

The Labor Department on Friday reported that July non-farm payroll employment rose by 187,000, below the 200,000 economists expected, while the unemployment rate declined to a seasonally adjusted 3½% from 3.6% in June.

In other distressed retail paper, QVC Inc.’s notes rallied more than 1 point to 4 points but trading was light, a source said.

The 4 3/8% senior secured notes due 2028 (B2/B-) jumped 3 points on $1 million of volume.

Meanwhile Friday, Carvana Co.’s 10¼% senior notes due 2030 (Ca/C) slid 7 points on light volume totaling $3 million.

Rite Aid climbs

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) rallied 2 1/8 points to 54 7/8 bid and a 30.88% yield, up 2 1/8 points on $15 million of secondary activity on Friday, a source said.

The notes were the most active distressed issue traded Friday afternoon, according to the market source.

At the start of the session, the issue had climbed 1 point.

In Thursday’s session, the bonds improved over 3 points to 52¾ bid.

Also Friday, Rite Aid’s 7½% senior secured notes due 2025 (Caa3/CCC-/B) rose ½ point to 58¾ bid on $6 million of trading. The yield was 40.7%.

The company’s credit default swap spreads eased more than 1,000 basis points this past week ended Wednesday.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD), up 14.73% on Thursday, added 4.28% on Friday to close at $2.68 in heavy interest on around 33 million shares traded.

Average volume is 3.3 million shares.

CommScope softens

CommScope, Inc.’s 8¼% senior notes due 2027 (Caa1/CCC+) were off 5/8 point at 63 3/8 bid on $11 million of secondary action on Friday, a source reported.

The bonds were last seen down 6½ points on Thursday at 68 bid on $26.56 million of trading.

CommScope’s 5% senior notes due 2027 (Caa1/CCC+) also fell ¾ point to 58¾ bid on $3 million of trading on Friday.

The bonds were quoted Thursday down 6½ points at 59½ bid on $4 million of volume.

CommScope’s bonds and stock sank on Thursday after it reported lower second-quarter sales and wider losses.

The company also decreased its outlook for core adjusted EBITDA for 2023 to $1.15 billion from $1.25 billion.

Losses in the Hickory, N.C.-based network infrastructure manufacturer’s stock (Nasdaq: COMM) slowed on Friday.

Shares fell 1.23% to $3.22.

The stock sank 26.24% on Thursday.

QVC improves

QVC’s 4¾% senior secured notes due 2027 (B2/B-) were up more than 1½ points at 64¾ bid on $3 million of volume on Friday, a source said.

The 4 3/8% senior secured notes due 2028 (B2/B-) jumped 3 points to 57 bid on $1 million of trading during the session.

The home shopping network company’s 4.45% senior secured notes due 2025 (B2/B-) also climbed 4 points to 89½ bid on $3 million of trading on Friday.

West Chester, Pa.-based parent Qurate Retail Inc.’s stock (Nasdaq: QRTEA) closed the day up 0.35% to 93 cents.

Carvana bonds slip

Carvana’s 10¼% senior notes due 2030 (Ca/C) slid 7 points to 75 bid on Friday afternoon on $3 million of trading, a source reported.

The bonds had improved midweek after Carvana launched its exchange offers for outstanding senior notes, including the 10¼% issue.

The issue was quoted Wednesday up about 1¾ points at 81 bid.

Carvana announced on Wednesday that it launched its exchange offer for its outstanding senior notes for up to an aggregate principal amount of $4.275 billion in new cash/PIK senior secured notes.

Carvana also started a $425 million cash tender offer for its 5 5/8% senior notes due 2025.

The exchange offers expire Aug. 30.

The Tempe, Ariz.-based online car retailer’s stock (Nasdaq: CVNA) closed Friday down 12.26% to $45.44.

Distressed returns higher

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Thursday to minus 0.01% from minus 0.55% on Wednesday and minus 0.17% on Tuesday but were down from 0.5% at the week’s start.

Month-to-date total returns were flat at minus 0.72% on Thursday.

Year-to-date distressed total returns slipped to 14.1% on Thursday from 14.11% on Wednesday, 14.75% on Tuesday and 14.94% on Monday.

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