99 Cents paper quiet on store liquidation; Michaels mostly steady; distressed supply light

By Cristal Cody

Tupelo, Miss., April 4 – 99 Cents Only Stores LLC announced Thursday it plans to start an orderly wind-down of its business operations, though the outcome of its $350 million of outstanding secured bonds was unclear.

The company said it has entered into an agreement with Hilco Global to liquidate all merchandise and dispose of certain fixtures, furnishings and equipment at all 371 of the company's stores, starting Friday.

99 Cents Only Stores said the outcome came after it and financial and legal advisers spent months pursuing all available and credible alternatives that would allow the business to continue.

The company did not respond for comment regarding its bonds by press time.

99 Cents Only Stores’ 7½% senior secured notes due 2026 (Caa2/CCC) were quiet Thursday but seen earlier in the week in thin volume, a trader said.

“Nothing has traded today,” the source said.

Distressed arts and crafts retailer Michaels Cos, Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC-) went out mostly unchanged on the day and holding on to gains of more than 5 points made in the prior week.

Overall distressed trading supply was light Thursday with under $150 million of bonds reported traded over the session.

Market tone was weak as stocks tanked Thursday and the ‘Fear Factor’ index increased over 14% ahead of Friday’s March jobs report.

The S&P 500 index dropped 1.23%.

The iShares iBoxx High Yield Corporate Bond ETF fell 6 cents, or 0.08%, to $76.89.

The CBOE Volatility Index jumped 14.1% by the close to $16.35.

The Labor Department will release the March non-farm payroll report on Friday.

99 cents liquidates

99 Cents Only Stores’ 7½% senior secured notes due 2026 (Caa2/CCCdd) were quiet Thursday but seen earlier in the week in thin volume, a trader said.

“They were last around 30,” the source said. “Don’t see much trading.”

The company said Hilco Global will liquidate all merchandise and also is managing the sale of the company's owned and leased real estate assets in Arizona, California, Nevada and Texas.

The Commerce, Calif-based discount dollar store was founded in 1982.

Michaels mostly flat

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) were trading mostly unchanged on the day at around the 75¾ bid range, a source said.

Volume was steady with $7 million reported.

The bonds rallied over 5 points in the prior week.

The Irving, Tex.-based arts and crafts retailer was taken private in 2021 by funds managed by Apollo Global Management, Inc. affiliates.

Distressed index improves

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved slightly to negative 0.15% on Wednesday, compared to minus 0.78% on Tuesday and minus 0.39% on Monday.

Month-to-date total returns widened to negative 1.31% from negative 1.17% on Tuesday and negative 0.39% at the start of the week.

Year-to-date total returns softened Wednesday to 0.79% versus 0.94% on Tuesday and 1.73% on Monday.

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