CommScope trades mostly lower; Spirit Airlines softens; Rite Aid bonds up; WeWork quiet

By Cristal Cody

Tupelo, Miss., Nov. 21 – Secondary action slowed on Tuesday with desks expected to be thinly staffed on Wednesday ahead of the Thanksgiving Day holiday, sources reported.

Overall distressed bond trading supply was tracking around $179 billion by the close, down from $184 billion in the same period on Monday.

Distressed paper has been among the junk bond market’s biggest gainers this week, though paper was softening on Tuesday in the lighter activity, sources reported.

CommScope Holding Co., Inc.’s paper traded mostly lower on Tuesday in one of the most active issues.

The 8¼% senior notes due 2027 (Caa2/CCC-) were down about 1 point on $13.5 million of volume.

Spirit Airlines Inc.’s 8% senior secured notes due 2025 (B2) gave back some of Monday’s gains headed into the afternoon and close.

The bonds declined 3¼ points in lighter trading after climbing over 4 points on Monday in heavier supply.

Stocks slumped on Tuesday following the release of the minutes from the Federal Reserve’s Oct. 31-Nov. 1 monetary policy meeting where rates were left unchanged for a second time.

The S&P 500 index fell 0.2%.

The iShares iBoxx High Yield Corporate Bond ETF rose 10 cents, or 0.13%, to $74.95.

The CBOE Volatility index decreased 0.45% to 13.35.

Bankrupt Rite Aid Corp.’s bonds have seen some gains so far this week in light trading.

Rite Aid’s 8% senior secured notes due 2026 were quoted mostly flat after adding more than 5 points in the prior session.

According to a KBRA report on Tuesday, Rite Aid’s bankruptcy impacts $1.42 billion in CMBS loans with the company paying approximately $80 million annually for leases on closed stores.

WeWork Inc.’s Nov. 6 bankruptcy filing also is expected to “impact the New York City office market hardest” with the company looking to exit 40 locations including seven tied to $1.3 billion in CMBS, KBRA said in the note.

WeWork’s distressed paper was quiet in the secondary market.

The issuer’s 15% first-lien senior secured notes due 2027 (/D/C) were last seen in the prior week with a 35 bid handle.

CommScope mostly softer

CommScope, Inc.’s 8¼% senior notes due 2027 (Caa2/CCC-) fell about 1 point to around 45½ bid and a 39.12% yield on $13.5 million of volume on Tuesday, a source said.

The notes gave back ½ point on $3.5 million in the prior session.

CommScope Technologies LLC’s 6% senior notes due 2025 (Caa2/CCC-) declined 1¼ points to 77½ bid in lighter trading totaling $2 million on Tuesday.

The notes were bumped ¼ point higher Monday on $4 million of volume.

CommScope’s 5% senior notes due 2027 (Caa2/CCC-) fared better over the session. The notes went out up 3/8 point at 39½ bid and yielding 30% on $10 million of trading.

S&P said on Monday it downgraded CommScope on an elevated risk of a distressed exchange or buyback within the next 12 months.

The Hickory, N.C.-based network infrastructure manufacturer reported earlier in the month third-quarter losses and a 33% drop in quarterly revenue.

Shares (Nasdaq: COMM) declined 9.94% to $1.72 on Tuesday.

Spirit bonds slip

Spirit Airlines’ 8% senior secured notes due 2025 (B2) were trading more than 2 points lower at around 72½ bid on more than $3 million of volume by early afternoon, according to a market source.

By the close, the bonds were down 3¼ points at 71½ bid and yielding 28.6% on $6.5 million of supply.

The issue had climbed 4½ points on Monday on $9.91 million of activity.

Moody’s said in the previous session that it downgraded the company and the bonds issued by subsidiaries Spirit IP Cayman Ltd./Spirit Loyalty Cayman Ltd. based on expected operations losses through 2024.

The Miramar, Fla.-based low-cost airline reported heavy third-quarter losses in October.

Spirit Airlines’ stock (NYSE: SAVE) fell 3.7% to $12.77.

Rite Aid paper mixed

Rite Aid’s 8% senior secured notes due 2026 went out mostly flat at 75½ bid on Tuesday on $3 million of volume after climbing in the prior session, a source said.

The bonds traded on Monday over 5 points better from Friday.

Rite Aid’s 7.7% debentures due 2027 softened about ½ point from the prior session to a 4 bid handle in thin activity on Tuesday.

The 7½% senior secured notes due 2025 were quiet during the session and last seen trading on Thursday at 75¼ bid.

Since the company’s Oct. 15 bankruptcy filing, the Philadelphia-based retailer has announced the closure of 205 stores and is seeking to reject 382 leases as part of its restructuring plan, according to the KBRA report.

“Bankruptcy filings show the company as of June is paying approximately $80 million in ‘dead rent’ annually for leases on shuttered stores,” KBRA said.

WeWork bonds quiet

In other bankrupt paper, WeWork’s 15% first-lien senior secured notes due 2027 (/D/C) were last seen active in the secondary market on Friday, a source said.

The issue traded down ½ point to 35½ bid and a 50.67% yield on $2.73 million of activity.

WeWork 11% second-lien senior secured notes due 2027 (/D/C) also were last traded on Friday at 17½ bid and a 73.11% yield on $3 million of activity.

The New York-based office share company filed for Chapter 11 bankruptcy on Nov. 6 and has entered into a restructuring support agreement with investor SoftBank Group Corp. and holders of about 92% of the company’s first-, second- and third-lien notes.

Distressed returns up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns kicked the week off stronger on Monday.

Returns were 0.22%, up from minus 0.08% on Friday and 0.07% in the same session a week ago.

Month-to-date total returns improved to 2.32% on Monday from 2.1% on Friday and 0.94% in the week-ago session.

Year-to-date distressed total returns climbed on Monday to 13.02%, compared to 12.82% ahead of the weekend and 11.54% in the same session last week.

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