Enviva notes edge back from plunge; CommScope moves lower; Level 3 paper rallies

By Cristal Cody

Tupelo, Miss., Nov. 10 – Enviva Partners, LP’s 6½% senior notes due 2026 (B3/CC) took back 4¼ points in secondary trading on Friday after plunging over 30 points in the prior session.

CommScope Holding Co., Inc.’s 6% senior notes due 2025 (Caa1/CCC+) also declined another 1¾ points after giving back 1 point the previous day.

Market tone was up as Treasury yields mostly declined.

The S&P 500 finished 1.56% better, while the iShares iBoxx High Yield Corporate Bond ETF rose 36 cents, or 0.49%, to $74.06.

The CBOE Volatility index was down 7.33% on the day to 14.17.

In other distressed paper, Level 3 Financing, Inc.’s bonds rallied as much as 8 points in active trading on Friday.

The company’s 3 5/8% senior notes due 2029 (B3/CCC+/CCC+) climbed 7 points.

Enviva improves

Enviva Partners’ 6½% senior notes due 2026 (B3/CC) took back 4¼ points in secondary trading on Friday, a source said.

The bonds were quoted at 36¾ bid and a 64.43% yield on $15.56 million of volume over the afternoon.

On Thursday, the issue plunged 31¾ points to hit 32½ bid and a 72.71% yield on $60.63 million of trading.

The volatility followed after Enviva reported Thursday heavy third-quarter losses, a shake-up in its leadership and that it has engaged advisers for a review of strategic alternatives.

The Bethesda, Md.-based industrial wood pellets manufacturer also withdrew its previous guidance for 2023.

S&P Global Ratings downgraded the notes to CC from B- following the report on the likelihood of a distressed debt exchange or default over the next six months.

The company’s stock (NYSE: EVA) plummeted 77.86% to 85 cents on Thursday and closed Friday up 8.58% at 92 cents.

CommScope softens

CommScope Technologies LLC’s 6% senior notes due 2025 (Caa1/CCC+) dropped 1¾ points to 76¼ bid on $20.7 million of activity on Friday, a source said.

The bonds extended declines from the prior session. The issue fell 1 point on Thursday on $29 million of trading.

The Hickory, N.C.-based network infrastructure manufacturer expects preliminary third-quarter losses and has adjusted its 2023 EBITDA forecast downward.

Shares (Nasdaq: COMM) dropped 7.01% on Friday to $1.46.

Level 3 bonds jump

Level 3’s paper rallied across numerous tranches in active secondary trading on Friday, a source said.

The 3¾% senior notes due 2029 (B3/CCC+/CCC+) rose 3 points to 37 bid on $10 million of volume.

Level 3’s 3 5/8% senior notes due 2029 (B3/CCC+/CCC+) rallied 7 points to 76½ bid on $7.8 million of trading.

The company’s 4¼% senior notes due 2028 (B3/CCC+/CCC+) jumped 8 points to 42½ bid on $8.93 million of supply over the day.

Also, the 4 5/8% senior notes due 2027 (B3/CCC+/B) added 2 points to 48 bid on $4 million of volume on Friday.

Credit default swap spreads in parent Lumen Technologies, Inc. widened 337 basis points over the past week ended Wednesday to 3,829 bps, according to a Moody’s Investors Service report.

On Tuesday, Lumen announced it won a $110 million contract from the U.S. Defense Information Systems Agency.

The Denver-based telecommunications company plans to conduct a debt exchange after reaching an agreement with creditors holding about $7 billion of its debt.

Distressed index drops

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns dropped to minus 0.69% on Thursday from minus 0.07% on Wednesday, 0.36% on Tuesday and minus 0.21% on Monday.

Month-to-date total returns fell to 0.52% from 1.21% on Wednesday, 1.28% on Tuesday and 0.92% at the week’s start.

Year-to-date distressed total returns declined to 11.08% in the prior session from 11.85% on Wednesday, 11.92% on Tuesday and 11.52% on Monday.

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