QVC gains; WeWork sheds points; National CineMedia flat on Chapter 11 filing; AMC up

By Cristal Cody

Tupelo, Miss., April 12 – Distressed retail paper traded higher on Wednesday, led by gains from QVC Inc. and Michaels Cos, Inc., market sources reported.

QVC’s paper improved a second day with the home shopping network’s bonds trading about 2 points to more than 5 points better on more than $10 million of secondary volume, a source said.

QVC’s 4.45% notes due 2025 (B2/B-) added 2 3/8 points over the day.

WeWork Inc.’s paper continued to shed points after sliding in the prior session.

WeWork’s 7 7/8% senior notes due 2025 (CC/C), down more than 3 points on Tuesday, gave back 2 points on Wednesday.

The office share company’s stock hit a third consecutive record low on Wednesday.

Market focus Wednesday shifted from a tamer-than-expected inflation report to the release of the minutes of the Federal Reserve’s Federal Open Market Committee meeting held in March after the collapse of Silicon Valley Bank.

The Labor Department said Wednesday the Consumer Price Index rose 5% in March from the prior year, lower than the 6% increase in February and below analyst estimates of 5.1%.

After initial gains, stocks later weakened with the S&P 500 index closing down 0.41%.

The iShares iBoxx High Yield Corporate Bond ETF fell 2 cents to $74.91.

The CBOE Volatility index was little changed at 19.09.

National CineMedia LLC’s paper saw strong trading action following the company’s Chapter 11 bankruptcy filing but was mostly flat on the day, a source said.

National CineMedia’s 5¾% senior notes due 2026 (C/D) were trading under 3 bid.

Fitch Ratings said on March 13 that the U.S. high-yield broadcasting/media par-weighted default rate could surpass 8% if Diamond Sports Group LLC and National CineMedia failed to cure their missed interest payments. Diamond Sports filed for Chapter 11 in March.

Fitch noted the rate would exceed the 5.2% sector average since 2001 “and represent the highest sector rate since iHeart’s bankruptcy drove defaults to 18.3% in February 2019.”

The broadcasting/media default rate is forecast to finish 2023 at 10% based on the dollar value and 6.5% based on issuer count, Fitch said.

Fitch said in a report on Monday that it expects 2023 and 2024 to be pivotal years for the movie industry with theatrical releases and attendance growth expected to continue to recover from the pandemic years.

AMC Entertainment Holdings, Inc.’s paper was trading about ½ point to 7/8 point better on Wednesday on $18 million of secondary volume.

QVC bonds up

QVC’s paper was seen trading about 2 points to more than 5 points better on the long end of the capital structure in active trading totaling more than $10 million on Wednesday, sources said.

QVC’s 4.45% notes due 2025 (B2/B-) added 2 3/8 points to hit 71 bid by the close.

Trading totaled $3 million.

QVC’s 5.45% senior secured notes due 2034 (B2/B-/B+) went out more than 5 points higher with a 44 bid handle on $2.6 million of trading.

The notes were quoted more than ¼ point higher at 39¼ bid on Tuesday.

The 4 3/8% notes due 2028 (B2/B-) also rose 3¼ points to 50¼ bid on $2.5 million of volume on Wednesday.

QVC is a subsidiary of West Chester, Pa.-based home shopping network company Qurate Retail Inc.

WeWork moves lower

WeWork’s 7 7/8% senior notes due 2025 (CC/C) fell about 1½ to 2 points in active trading totaling $9 million on Wednesday, a source said.

The issue was quoted around 41, 41½ and later seen down about 2¼ points at the 40¾ bid area on $8.5 million of volume.

In the prior session, the notes traded more than 3 points lower at 43 bid, 44 offered.

The issue has declined from trading at 51½ bid, 52½ offered on Thursday.

WeWork’s stock hit a record low on Monday of 69 cents before hitting a new low Tuesday of 55 cents and setting a consecutive new low on Wednesday.

Shares closed down 13.38% at 48 cents.

The 52-week high was $8.08.

WeWork reported Tuesday that it will release first-quarter earnings results on May 9.

The New York-based office share company’s bonds and stock have softened since the company launched exchange offers and consent bids for two tranches of notes on April 3.

National CineMedia flat

National CineMedia’s 5¾% senior notes due 2026 (C/D) stayed mostly unchanged at around 2½ bid to under the 3 bid area on Wednesday following the Chapter 11 filing, a source said.

The paper saw strong trading supply totaling $9.76 million.

S&P Global Ratings dropped the notes to D from CCC- after the issuer’s Chapter 11 announcement.

The cinema advertising company missed bond coupon payments in October 2022 and again in February.

The Centennial, Colo.-based cinema advertising company reported that it filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas with plans to emerge from bankruptcy with no debt.

AMC picks up

AMC Entertainment’s bonds were seen trading higher on $18 million of overall volume during the session, a source said.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) improved 7/8 point to trade at 67 bid on $4.3 million of volume.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) rose ½ point to 71¼ bid by the close on $5.4 million of trading.

The issue was up 1¼ points on Tuesday at 70½ bid.

AMC’s bonds drifted lower last week after a court blocked its motion to lift a status quo order following a settlement reached in a shareholder lawsuit regarding its issuance of preferred stock.

Before the settlement was reached, the Leawood, Kan.-based movie theater owner had an April 27 court hearing over the lawsuit from Allegheny County Employees’ Retirement System in the Delaware Court of Chancery.

The company’s common stock fell 1.66% to $5.34 on Wednesday.

AMC’s preferred shares rose 0.66% to $1.53.

Distressed index gains

S&P U.S. High Yield Corporate Distressed Bond index one-day returns improved in Tuesday’s session to 0.24% from 0.06% at the start of the week.

Month-to-date returns rose to 0.14% in the prior session from minus 0.11% on Monday.

Year-to-date total returns climbed on Tuesday to 4.66% versus 4.41% on Monday.

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