Rite Aid steadies; iHeartMedia notes extend losses; Level 3, Lumen paper trades mixed

By Cristal Cody

Tupelo, Miss., Oct. 26 – Familiar distressed names continued to rack up strong trading in the secondary market on Thursday, sources reported.

Rite Aid Corp.’s 8% senior secured notes due 2026 (/D/CC) were trading flat by the time the session wound down.

The bonds are about 2 points better on the week.

iHeartCommunications, Inc.’s 8 3/8% senior notes due 2027 (Caa1/CCC+) saw a second consecutive session of declines ahead of the company’s earnings report next month.

The notes traded off nearly ½ point on Thursday after softening 1/8 point in the prior session.

iHeartCommunications’ credit default swap spreads also widened more than 150 basis points this week.

The iShares iBoxx High Yield Corporate Bond ETF picked up 25 cents, or 0.35%, to $72.45 on Thursday as stocks slid and Treasury yields dropped.

The S&P 500 index closed down 1.18%.

The CBOE Volatility index increased 2.43% to 20.68.

Also Thursday, bonds from Level 3 Financing, Inc. traded mostly flat to 1 point weaker.

Level 3 parent Lumen Technologies, Inc.’s notes were flat to softer, while the issuer’s CDS spreads came in over 200 bps this week.

Rite Aid unchanged

Rite Aid’s 8% senior secured notes due 2026 (/D/CC) went out flat at 71½ bid on $6.5 million of trading on Thursday, a market source said.

The bonds were about 2 points higher so far this week after adding 3/8 point on Wednesday on $19 million of volume, 1/8 point on Tuesday on $12 million of trading and 1½ points on Monday on more than $15 million of activity.

The Philadelphia-based retailer’s notes traded at 65½ bid, 66½ offered before the company reported on Oct. 16 that it filed for Chapter 11 bankruptcy.

iHeartMedia dips

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa1/CCC+) slipped nearly ½ point on Thursday to around 64½ bid on $5.4 million of trading action, a source reported.

The bonds were 1/8 point lower on Wednesday on more than $8 million of secondary activity.

iHeartCommunications’ CDS spreads also widened 170 bps for the week ended Wednesday to 1,808 bps, according to a report from Moody’s Investors Service.

San Antonio-based parent media broadcasting company iHeartMedia, Inc. will report third-quarter earnings results on Nov. 9.

Level 3, Lumen mixed

Level 3’s 4 5/8% senior notes due 2027 (B3/CCC+/B) slipped 1 point to 68¼ bid on $11.25 million of trading on Thursday, a source said.

The 4¼% senior notes due 2028 (B3/CCC+/B) were flat at 58 bid on $12.4 million of volume.

Lumen’s 4% senior secured notes due 2027 (Caa2/B/BB-) traded mostly unchanged with a 66 bid handle on $3.5 million of supply over the day.

The company’s 7.65% senior notes due 2042 (Caa3/CCC-/CCC+) also were quoted at 28½ bid on $3 million of paper traded.

Lumen’s CDS spreads tightened 212 bps over the past week ended Wednesday to 3,591 bps, according to a Moody’s report.

The Denver-based telecommunications company will report third-quarter earnings results on Tuesday.

Distressed index pares gains

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns widened on Wednesday to minus 0.34% from 0.32% on Tuesday and 0.1% on Monday.

Month-to-date total return losses eased to minus 4.02% midweek versus minus 3.7% on Tuesday and minus 4.01% on Monday.

Year-to-date distressed total returns fell to 13.03% from 13.42% on Tuesday and 13.05% at the week’s start.

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