Embarq paper slides, CDS spreads widen; Rite Aid notes, CDS spreads soften; Qurate down

By Cristal Cody

Tupelo, Miss., Sept. 22 – Embarq Corp.’s paper remained weak on Thursday with the notes now giving back more than 24 points over the first four sessions of the week.

Embarq’s 7.995% notes due 2036 (Caa2/BB/BB) dropped more than 6 points by the end of the day.

The company’s credit default swap spreads also widened nearly 100 basis points for the past week ended Wednesday.

Meanwhile, Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) came under continued pressure on Thursday with the issue down more than 2 points in the secondary market.

Rite Aid’s CDS spreads also moved out more than 200 bps this week.

Pressure remained Thursday with stocks trending lower and the junk space weaker following the Federal Reserve’s interest rate hike on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF declined 45 cents, or 0.61%, to $73.05.

Stock indices all were lower. The Nasdaq closed off 1.3%.

The Fear Factor index was on the wane over the session. The CBOE Volatility index declined 3.43% to 27.03 by the market close.

In other distressed retail paper, home shopping network owner QVC Inc.’s bonds moved down 3¾ points on Thursday in active secondary supply.

Parent company Qurate Retail Inc.’s 8½% senior debentures due 2029 (B2/B-) slid over 4 points in thin trading during the session.

Embarq moves lower

Embarq’s 7.995% notes due 2036 (Caa2/BB/BB) were quoted at 50 bid by late afternoon Thursday, down more than 6¼ points from where the issue was seen in the prior session, according to a market source.

Secondary trading was busy with $14 million of paper traded.

Embarq’s notes have sunk 24½ points so far this week.

The notes went out Wednesday down about 4 points, slid nearly 8½ points on Tuesday and declined 6 points on Monday following a downgrade from Moody’s Investors Service.

Embarq’s CDS spreads also moved lower over the past week ended Wednesday, according to a Moody’s report.

Spreads were 93 bps wider at 759 bps.

The Overland Park, Kan.-based telecommunications company will become a subsidiary of Connect Holding II LLC, doing business as Brightspeed, in connection with its acquisition from Lumen Technologies, Inc. by Apollo Global Management, Inc. funds.

Rite Aid declines

The Rite Aid 8% senior secured notes due 2026 (B3/CCC-/BB-) moved more than 2 points lower on Thursday in active trading volume of more than $4 million, a source said.

The bonds were quoted at 79 bid.

Rite Aid’s CDS spreads also widened more than 200 bps this week, Moody’s said.

The Camp Hill, Pa.-based drug retailer’s CDS spreads moved out 203 bps to 2,082 bps for the week ended Wednesday.

QVC, Qurate notes drop

QVC’s 4 3/8% senior secured notes due 2028 (Ba2/BB) saw fairly active trading in the distressed space on Thursday with more than $6 million of notes moving 3¾ points lower, a source said.

The issue was quoted at 69½ bid.

QVC is operated by West Chester, Pa.-based media company Qurate Retail, formerly known as Liberty Interactive Corp.

Qurate Retail’s 8½% senior debentures due 2029 (B2/B-) issued by Liberty Media Corp. also dropped more than 4 points to the 68 bid range on Thursday on thin volume of less than $1 million, a source said.

The home shopping network owner’s notes have been under pressure in the back half of the year, declining from the 91 bid range in April.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns improved on Wednesday to 0.39% following the Federal Reserve’s rate hike, up from minus 0.19% on Tuesday but still off Monday’s 0.44% level.

Month-to-date total returns rose to minus 1.43% on Wednesday from minus 1.81% on Tuesday and minus 1.62% in Monday’s session.

Year-to-date total returns improved to minus 22.22% from minus 22.53% on Tuesday and minus 22.38% at the week’s start.

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