CommScope bonds mixed; Michaels stronger; WW paper moves higher; Herbalife notes gain

By Cristal Cody

Tupelo, Miss., April 23 – CommScope Holding Co., Inc.’s bonds mostly rallied on Tuesday with the name seen among the biggest gainers in the distressed space, though still down more than 10 points from March.

The paper went out flat to nearly 4 points higher on the day.

Michaels Cos, Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC) also climbed ¾ point in heavy trading over the session.

WW International Inc.’s 4½% senior secured notes due 2029 (Caa1/CCC+) were staging a small comeback this week in light trading after softening in the prior week.

The notes were around 1 5/8 points better from where the issue went out Friday.

WeightWatchers’ paper was under a “little bit of pressure” last week, a source said.

WW’s bonds have been soft since reports of the exit of longtime board member Oprah Winfrey and that the company was engaged with lender talks.

Herbalife Ltd.’s 4 7/8% senior notes due 2029 (B3/B) yielding over 17.7% hit the distressed space over the last couple of sessions, a source said.

The bonds rallied 1 5/8 points on Tuesday and added 1/8 point on Monday on $15 million of volume.

Overall distressed trading supply was light with under $160 million of volume reported by the close.

Stocks rallied through the close with indices all higher as Treasury yields fell on a decline in the flight-to-safety bid. The S&P 500 index rose 1.2%, while the Nasdaq was 1.59% better.

The iShares iBoxx High Yield Corporate Bond ETF added 31 cents, or 0.41%, to $76.71.

The benchmark 10-year Treasury note yield fell 3 basis points to 4.6%.

Market volatility continued to pull back after ramping up last week.

The CBOE Volatility index, down 9.46% on Monday, declined 7.38% to 15.69 on Tuesday.

Still early in the first-quarter earnings reporting season with around 80 companies reporting so far, more than 81% have exceeded expectations, while 15% “have fallen short of expectations,” according to a Confluence Investment Management note on Tuesday.

CommScope mostly up

CommScope Technologies LLC’s 6% senior notes due 2025 (Ca/CCC-) recovered 3¾ points to trade at 78½ bid on Tuesday, still more than 10 points down from where it traded in March, a source said.

The bonds saw $9 million of secondary action by the close.

The issue was quoted March 13 at 90¾ bid.

CommScope’s 5% senior notes due 2027 (Caa2/CCC-) traded unchanged on Tuesday at 35 bid on $2 million of activity.

CommScope, Inc.’s 8¼% senior notes due 2027 (Ca/CCC-) added 1 1/8 points to a quote of 38 7/8 bid on $3 million of secondary action.

The issue has dropped from trading with a 50 bid handle in the prior month.

Moody’s Investors Service downgraded the company and bonds in March on increasing risk of a capital restructuring, including a distressed debt exchange.

The Hickory, N.C.-based network infrastructure manufacturer will post first-quarter earnings results on May 9.

Michaels higher

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC) revved ½ point higher on Tuesday to 72¼ bid in the day’s most actively traded distressed issue, a source reported.

Secondary volume hit $15 million by the close.

The notes have softened over 3 points from the start of the month.

S&P Global Ratings upgraded the company and the notes earlier in April, noting significant improvement in the retailer’s operating margin and cash generation in fiscal 2023.

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

WW improves

WW International’s 4½% senior secured first-lien notes due 2029 (Caa1/CCC+) traded Tuesday better at 37 5/8 bid in light activity, a source said.

The issue was up from where the paper went out Friday at 36 bid, 37 offered but still softer from a week ago when the notes traded at 38 bid, 39 offered.

“It’s not very active,” one source said.

WW’s bonds and stock have been on the decline since February as the company faces weaker financial results, rival service operators and the exit of longtime board member Oprah Winfrey following the May annual shareholders meeting.

Moody’s Ratings and S&P Global Ratings downgraded WW and the bonds in March on weak growth.

WW International will report first-quarter earnings results after the market closes on May 2.

The New York-based WeightWatchers operator’s stock (Nasdaq: WW) hit new 52-week lows in March.

Shares climbed 5.52% on Tuesday to $1.72.

Herbalife notes trade

Herbalife’s 4 7/8% senior notes due 2029 (B3/B) rallied 1 5/8 points to 59½ bid on Tuesday on $7 million of volume, a source said.

The notes, issued by HLF Financing Sarl, LLC and Herbalife International, Inc., rose 1/8 point on Monday on $8 million of trading.

Herbalife, a Los Angeles-based company that markets weight management, health and nutrition supplements, will report first-quarter earnings results on May 1.

Distressed returns

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns kicked the week off higher at 0.33%, up from negative 0.03% on Friday and minus 0.52% in the same session last week.

Month-to-date total return losses firmed to minus 2.94% on Monday versus negative 3.26% on Friday but remained wider than negative 1.76% in the week-ago session.

Year-to-date total return losses were minus 0.87% in the prior session, compared to minus 1.2% on Friday and 0.34% the same day last week.

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