Rite Aid secured notes extend gains; QVC, Qurate Retail paper higher; DISH bonds mixed

By Cristal Cody

Tupelo, Miss., Aug. 7 – Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/CCC-/B) have been on a tear higher for more than a week and continued the trend Monday in strong trading action.

The notes climbed 3 1/8 points on $10.6 million of volume, outpacing volume in other distressed names during the session, a source said.

Rite Aid’s paper went out Friday over 2 points higher.

QVC Inc.’s notes also traded about ¼ point to 1 point better Monday in mostly light secondary action.

The 4¾% senior secured notes due 2027 (B2/B-) were up 1 point after going out Friday over 1½ points higher.

Parent Qurate Retail Inc.’s 8½% senior notes due 2029 (Caa2/CCC-) traded ¾ point at the start of the session, climbed a full point by the afternoon and went out even better – up 1½ points on the day.

Meanwhile, DISH Network Corp. higher-rated junk paper was down ¼ point on more than $24 million of trading action, while DISH’s more distressed bonds went out mostly flat Monday in light supply.

The 7¾% senior notes due 2026 (Caa2/B-) traded marginally higher on $3.3 million of activity.

Stocks rallied Monday after dropping last week following Fitch Ratings’ downgrade of the United States to AA+ from AAA.

The S&P 500 index closed up 0.9%.

The CBOE Volatility Index dropped 7.78% to 15.77.

The iShares iBoxx High Yield Corporate Bond ETF improved 14 cents, or 0.19%, to $74.79.

CPI

Market focus this week is expected to center on the July Consumer Price Index data due out Thursday with the event premium looking “underpriced in FX” volume, BNP Paribas Securities analysts said in a note released Monday.

“The July CPI report should continue to mark good news on the inflation front, albeit with drivers that differ from June,” the analysts said. “The July CPI report is the second-to-last before the September FOMC meeting. Though we expect the August headline reading to climb due to higher gasoline prices, the milder trend in core will allow the Fed to hold rates steady, in our view.”

A final peak in corporate earnings releases also is expected this week with 2,977 reports due, including from companies giving off signals of possible negative results, Christine Short of Wall Street Horizon reported in a market note released Monday.

“This week we get results from a number of large companies on major indexes that have pushed their Q2 2023 earnings dates outside of their historical norms,” Short said. “Four companies within the S&P 500 confirmed outlier earnings dates for this week, all of which are later than usual. Those four names are Coterra Energy, Celanese Corp., Insulet Corp. and United Parcel Service. According to academic research, the later than usual earnings dates suggest these companies will report ‘bad news’ on their upcoming calls.”

Rite Aid moving up

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) climbed 3 1/8 points to 58 bid on $10.6 million of volume Monday, a source said.

The bonds have climbed more than 8 points in the last three sessions.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) closed Monday 1.49% higher at $2.72 in strong trading totaling more than 20 million shares. Average volume in the stock is 3.8 million shares.

QVC paper better

QVC’s 4¾% senior secured notes due 2027 (B2/B-) were up 1 point at 66 bid on $4.4 million of trading supply Monday, a market source said.

On Friday, the notes traded more than 1½ points better at 64¾ bid on $3 million of volume.

The 4 3/8% senior secured notes due 2028 (B2/B-) also were about ¼ point better near the 58¼ bid area on $5 million of volume Monday.

The issue jumped 3 points to 57 bid on $1 million of trading Friday.

Meanwhile, parent Qurate Retail’s 8½% senior notes due 2029 (Caa2/CCC-) were up ¾ point at 38¼ bid at the start of the session, rallied a full point to 38½ bid by the afternoon and went out even better – up 1½ points on the day at 39 bid, another source said.

The West Chester, Pa.-based home shopping network company’s stock (Nasdaq: QRTEA) fell 1.91% Monday to 92 cents.

DISH flat to softer

DISH DBS Corp.’s 7¾% senior notes due 2026 (Caa2/B-) went out marginally higher around 65½ bid on $3.3 million of secondary activity Monday, according to a market source.

The company’s higher-rated junk paper was more active during the session on over $24 million of bonds changing hands.

DISH’s 11¾% notes due 2027 (B2/B) fell ¼ point to 99¾ bid on $12 million of trading.

The company has not announced a second-quarter earnings release date. DISH reported its first quarter earnings on May 8.

In July, Moody’s Investors Service downgraded the company and noted the potential for a distressed debt exchange, while DISH announced during the month a partnership with Amazon.com Inc. to offer wireless talk, text and data services.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) edged up 0.66% Monday to $7.64 in thin trading.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns finished Friday higher at 0.58%, compared to minus 0.01% on Thursday, minus 0.55% on Wednesday, minus 0.17% on Tuesday and 0.5% at the week’s start.

Month-to-date total returns improved Friday to minus 0.15% versus minus 0.72% on Thursday and Wednesday and minus 0.17% in the first session of August.

Year-to-date distressed total returns rose to 14.76% on Friday from 14.1% Thursday, 14.11% on Wednesday, 14.75% on Tuesday and 14.94% at the start of the prior week.

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