Community Health declines; Rite Aid notes rebound; CommScope paper moves lower

By Cristal Cody

Tupelo, Miss., Oct. 23 – The benchmark 10-year Treasury note yield briefly touched over 5% on Monday before yields dropped by the close.

Distressed paper was mixed in the aftermath, sources reported.

Community Health Systems Inc.’s 6 1/8% secured notes due 2030 (Caa2/CCC-) were 1 point lower in early trading but had recovered slightly by the afternoon and went out ½ point lower.

Bankrupt Rite Aid Corp.’s 8% senior secured notes due 2026 (/D/CC) reversed Friday’s weakness and improved 1½ points on Monday in heavy trading.

Market participants are expected to focus on the deluge of corporate earnings releases scheduled this week and keep an eye on monetary policy meetings from the Bank of Canada on Wednesday and the European Central Bank on Thursday with both expected to maintain current rates, sources said.

More than 1,500 earnings releases from publicly traded companies are scheduled for release this week, according to market sources.

The benchmark 10-year Treasury note yield had climbed to more than 5% as the session got underway but by the close was down 8 basis points at 4.83%.

The CBOE Volatility index declined 6.17% to 20.37.

The S&P 500 index fell 0.17%, while the iShares iBoxx High Yield Corporate Bond ETF improved 29 cents, or 0.4%, to $72.22.

CommScope Holding Co., Inc.’s 8¼% senior notes due 2027 (Caa1/CCC+) moved lower again on Monday after going out Friday nearly 2 points softer.

The notes declined ½ point as the week kicked off.

Community Health drops

Community Health’s 6 1/8% secured notes due 2030 (Caa2/CCC-) were 1 point lower in early trading but recovered slightly by the afternoon and went out ½ point weaker at 44 bid, a source said Monday.

Community Health’s 6 7/8% senior secured notes due 2029 (Caa2/CCC-) traded about 1¾ points lower at 47¼ bid in mostly light volume over the session.

The company’s higher-rated bonds also were softer on Monday.

Community Health’s 5¼% senior secured notes due 2030 (B3/B-) declined ¾ point to 72 bid.

Shares (Nasdaq: CYH) in the Franklin, Tenn.-based operator of acute care and outpatient facilities were unchanged on Monday at $2.52.

Rite Aid perks up

Rite Aid’s 8% senior secured notes due 2026 (/D/CC) added 1½ points to trade Monday at 71½ bid on more than $15 million of bond volume, a market source said.

On Friday, the bonds traded down nearly 1½ points to 69½ bid but went out on the week about 4¾ points higher.

Rite Aid announced a week ago that it filed for Chapter 11 bankruptcy and obtained commitments for $3.45 billion of debtor-in-possession facilities.

The Philadelphia-based retailer plans to close 154 stores as it continues operations.

CommScope softens

CommScope, Inc.’s 8¼% senior notes due 2027 (Caa1/CCC+) gave back ½ point on Monday to head out at 62 bid, a source said.

The bonds were quoted on Friday 1¾ points lower at 62½ bid.

The Hickory, N.C.-based network infrastructure manufacturer’s shares (Nasdaq: COMM) closed the day down 5.08% to $2.24.

Distressed returns weaken

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns finished Friday weaker at minus 0.74%.

One-day returns were minus 0.14% on Thursday, minus 0.37% on Wednesday, minus 1¼% on Tuesday and minus 0.17% at the prior week’s start.

Month-to-date total returns dropped to minus 4.1% versus minus 3.39% on Thursday, minus 3.25% on Wednesday, minus 2.89% on Tuesday and minus 1.66% in the first session of last week.

Year-to-date distressed total returns moved down Friday to 12.94% from 13.78% on Thursday, 13.94% on Wednesday, 14.36% on Tuesday and 15.81% at the start of the week.

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