Michaels uptrend continues; CommScope diverges, short-duration notes add to gains

By Abigail W. Adams

Portland, Me., March 7 – The distressed debt space saw a quiet yet firm session on Thursday with trading volume thin as recent market moving topical and earnings-related headlines faded from view.

While quiet, market sentiment improved after Federal Reserve chair Jerome Powell’s second day of congressional testimony with Powell conceding that Fed officials were close to receiving the confirmation needed to begin their rate cut campaign.

Market players are now eyeing June as the most likely start for rate cuts, a source said.

The testimony lifted sentiment but did not translate into trading activity with the names that were active during Thursday’s session carry-overs.

Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC-) continued the strong uptrend that formed post-earnings in mid-February with buyers lifting the notes higher in heavy volume.

CommScope Holding Co., Inc.’s senior notes (Caa2/CCC-) diverged on Thursday with the shorter duration 6% senior notes due 2025 making large gains to the upside while the 8¼% senior notes due 2027 continued to fall.

Michaels improves

Michaels’ 7 7/8% senior notes due 2029 continued their strong uptrend on Thursday with buyers again lifting the notes.

The 7 7/8% notes added ¼ to ½ point with the notes trading in the 67¾ to 68¼ context in heavy volume, according to a market source.

The yield was about 17½%.

There was $16 million in reported volume.

The notes have been on a strong uptrend since mid-February when the retailer reported earnings, a source said.

The notes were trading on a 60-handle heading into the earnings release.

CommScope mixed

CommScope’s senior notes saw a large divergence on Thursday with its short-duration notes making large gains while its longer-dated notes saw large losses.

CommScope’s 6% senior notes due 2025 rose 1½ points in active trade.

They were changing hands at 86½ heading into the market close with the yield 18½%, according to a market source.

There was $7 million in reported volume.

The notes have been on a strong uptrend over the past month with the notes on an 82-handle at the start of March.

While CommScope’s 2025 notes continued to rise, the 8¼% senior notes due 2027 saw large losses.

The notes sank 2 to 2½ points in light volume.

The notes were trading at 44¼ with a yield of 43 3/8% heading into the market close, a source said.

CommScope’s notes have followed different trajectories since the network infrastructure provider reported earnings last week.

While the 2025 notes climbed, the longer-duration notes have fallen with the market more confident that the company will be able to address the 2025 maturity than its longer-dated issues, a source said.

Index

The S&P U.S. High Yield Corporate Distressed Bond index added 0.19% on Wednesday with the year-to-date return now 3.31%.

The index inched up 0.02% on Tuesday and 0.26% on Monday.

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