AMC drops on stock plans; DISH attracts secondary interest, notes mixed; Rite Aid slips

By Cristal Cody

Tupelo, Miss., Sept. 6 – AMC Entertainment Holdings, Inc.’s bonds mostly declined on Wednesday, while its stock sank nearly 40% after the issuer announced plans to sell more common stock.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) slid 2 points in heavy trading that topped $19 million, putting it at the top of the most active distressed names traded over the day, a source said.

DISH Network Corp.’s notes also attracted a chunk of the day’s distressed trading.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) finished flat on $11 million of secondary supply.

Stocks were depressed a second consecutive session on Wednesday.

The S&P 500 index fell 0.7%, and the iShares iBoxx High Yield Corporate Bond ETF moved down 18 cents, or 0.24%, to $74.40.

The CBOE Volatility index rose 3.14% to 14.45.

In other distressed paper, Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/C/B) softened a second session. The notes went out Wednesday 1 3/8 points lower after giving back 1/8 point on Tuesday.

The distressed market got a few potential additions in August when downgrades outnumbered upgrades after a benign July, S&P Global Ratings said Wednesday.

“Financial institutions and consumer producers featured prominently among the downgrades, while metals and mining showed the sharpest rise in the negative bias,” S&P said. “Yet there were six rising stars over the summer, two each in the media and entertainment and homebuilder/real estate sectors, and one each in aerospace/defense and oil and gas.”

Defaults followed a similar pattern and almost doubled in August, S&P said.

“The media and entertainment and consumer products sectors led the defaults, and we raised our forecasts of speculative-grade defaults through June 2024 for both the U.S. and Europe to 4.5% and 3.75%, respectively,” the agency said.

Meanwhile, the amount of speculative-grade debt outstanding declined by 3.1% in the 12 months ending July 1 as lower-rated issuers, facing higher-for-longer interest rates, appeared more focused on refinancing or paying down existing debt, according to the release.

“While more than 90% of investment-grade debt consists of fixed-rate bonds and notes, speculative-grade debt is more exposed to higher interest rates through its larger concentration of floating-rate loans and revolvers,” S&P said.

AMC notes decline

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) declined 2 points in strong trading totaling $19 million by late Wednesday, a source said.

The bonds were quoted at 68 bid.

The issue went out Friday at 69¾ bid.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also fell around ½ point to 67¾ bid on $5 million of secondary volume.

The notes went out Friday at 68¼ bid.

AMC’s bonds have been under pressure since the company converted its preferred equity into class A common stock in August.

On Wednesday, AMC filed a prospectus supplement to sell up to 40 million shares of class A common stock.

AMC said in the regulatory filing that its stock has ranged from an intraday high this year of $85.30 on Feb. 28 to a low of $10.72 on Aug. 29.

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) plunged 36.8% by the close to $8.62 in heavy volume on Wednesday.

DISH notes mixed

Traders piled into DISH DBS Corp.’s 7¾% senior notes due 2026 (Caa2/B-) on Wednesday with $11 million of paper changing hands, a source said.

The bonds were quoted flat at 75 bid.

The issue traded Tuesday with a 74 bid handle on $5 million of activity.

DISH’s 5 1/8% senior notes due 2029 (Caa2B-) also were moving during the session on $11 million of volume and went out at 54 5/8 bid.

The 7 3/8% senior notes due 2028 (Caa2/B-) slipped ¾ point to 62½ bid on $6 million of activity on Wednesday.

DISH’s bonds have been volatile since August on the announcement of its plans to merge with EchoStar.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) closed 1.64% higher at $6.21 in light trading.

Rite Aid softens

Rite Aid’s 8% senior secured notes due 2026 (Caa3/C/B) gave back about 1 3/8 points on Wednesday to a quote of 60 7/8 bid in thin trading, a source said.

The notes slipped 1/8 point on Tuesday to trade at 63 3/8 bid on $5 million of volume.

The issue has been volatile following news reports in late August that the retailer plans to soon file for Chapter 11 bankruptcy.

Rite Aid’s credit default swap spreads gapped out more than 8,000 basis points last week.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) closed Wednesday down 3.58% to 71 cents in thin volume.

Distressed returns higher

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved Tuesday to 0.1%, up from 0.07% ahead of the Labor Day holiday.

Month-to-date total returns were 0.17% in the second session of September.

Year-to-date distressed total returns rose to 17.32% on Tuesday from 17.2% on Friday.

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