Michaels’ notes slide; QVC, Qurate soften; Rite Aid mostly weaker; DISH on the rebound

By Cristal Cody

Tupelo, Miss., Oct. 5 – Distressed retail bonds had some of the biggest declines in strong secondary trading on Thursday.

Michaels Cos, Inc.’s bonds slid 3¼ points to 3½ points in some of the day’s heaviest traded notes on $39 million of volume over two tranches following a downgrade.

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) shed 3½ points by the day’s end on $18 million of secondary action.

Home shopping network QVC Inc. and parent Qurate Retail Inc. also remained under pressure.

QVC’s 4 3/8% senior secured notes due 2028 (B2/B-) fell about 2 points, while Qurate Retail’s 8½% senior notes due 2029 (Caa2/CCC-) traded off 1¾ points.

Qurate Retail’s credit default swap spreads also widened nearly 300 basis points this week.

Rite Aid Corp.’s notes traded flat to weaker in light activity Thursday after the distressed company reported that its stock is no longer in compliance with New York Stock Exchange listing requirements.

The 8% senior secured notes due 2026 (Caa3/CCC-/B) were mostly unchanged.

Meanwhile, Rite Aid’s CDS spreads widened more than 4,000 bps this week.

Market tone was soft with stock indices all lower and crude oil down a second day.

The iShares iBoxx High Yield Corporate Bond ETF rose 7 cents, or 0.1%, to $72.59.

The CBOE Volatility Index was less than 1% lower at 18.49.

DISH Network Corp. paper staged a small turnaround with its bonds quoted up about 5/8 point to 1 point.

The 7¾% senior notes due 2026 (Caa2/B-) topped secondary action in the junk and distressed spaces on more than $40 million of trading.

Michaels declines

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) shed 3½ points by the day’s end on $18 million of secondary action, a source reported Thursday.

The bonds were quoted at 60 bid in one of the company’s most traded issues Thursday.

Michaels’ 5¼% senior secured notes due 2028 (B2/CCC+/) attracted the most interest on more than $31 million of volume during the session.

The issue was down 3¼ points at 74¾ bid.

The Irving, Tex.-based arts and crafts retailer and the bonds were downgraded in the prior session by S&P Global Ratings.

QVC, Qurate lower

QVC’s 4 3/8% senior secured notes due 2028 (B2/B-) fell about 2 points to around 47½ bid on $1.8 million of trading Thursday, a source said.

Parent Qurate Retail’s 8½% senior notes due 2029 (Caa2/CCC-) also were down 1¾ points at 29 bid and over 5 points lower on the week, another source said.

The CDS spreads of the West Chester, Pa.-based company, formerly known as Liberty Interactive LLC, eased 291 bps over the past week ended Wednesday to 3,115 bps, Moody’s Investors Service said.

Rite Aid notes mixed

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) stayed mostly flat to modestly softer on the day at 61 bid on $2.4 million of trading Thursday, according to a market source.

The retailer’s 7½% notes due 2025 (Caa3/C) were quoted at 61¼ bid on $6 million of trading in the issuer’s most active bond in the secondary market.

Rite Aid’s 7.7% notes due 2027 (Ca/C) dropped just under 1½ points Thursday to a 6 bid handle. Trading was $1 million in the issue with a print of 6.8.

The company continues to flash distress signals with its CDS spreads widening more than 4,000 bps this week.

Rite Aid’s CDS spread widened 4,134 bps over the week ended Wednesday to 46,896 bps, according to a Moody’s report.

The company is reportedly expected to file for Chapter 11 bankruptcy.

Rite Aid announced after the markets closed Wednesday that it received notice on Sept. 28 that its stock is no longer in compliance with New York Stock Exchange listing requirements due to several factors, including that its stock price has fallen below $1 per share over a consecutive 30-day trading period with the average closing price at 88 cents per share.

Rite Aid said it has 10 business days from receipt of the notice to indicate whether it intends to fix the issues and has six months to bring its share price above $1. Shares will continue to be listed and trade during the cure periods.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) closed up 1.92% at 54 cents Thursday.

DISH bonds improve

DISH DBS Corp.’s 7¾% senior notes due 2026 (Caa2/B-) traded up nearly 1 point to around 70 bid on $40.95 million of volume Thursday, a source said.

The company’s 5 1/8% senior notes due 2029 (Caa2/B-) added 5/8 point to head out at 52½ bid on $8.7 million of trading also over the day.

DISH’s bonds had dropped more than 3 points on Tuesday in the first session after the FCC announced the first-ever space debris enforcement action had been taken against DISH.

Meanwhile, CDS spreads for the Englewood, Colo.-based satellite cable operator widened over the week.

DISH DBS CDS spreads eased 191 bps in the week ended Wednesday to 1,933 bps, Moody’s said.

DISH Network CDS spreads also widened 160 bps over the week ended Wednesday to 1,623 bps.

Distressed index moderates

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns had some recovery midweek.

On Wednesday, one-day returns were minus 0.04%, up from minus 1.68% and minus 0.73% on Monday.

Month-to-date total returns widened to minus 2.44% over the first three sessions of the month. Month-to-date total returns were minus 2.4% on Tuesday and minus 0.73% at the week’s start.

Year-to-date distressed total returns softened to 14.9% versus 14.94% on Tuesday and 16.91% on Monday.

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