Exela paper weak as issuer faces default; Coinbase soft; retailers pressured; Rite Aid up

By Cristal Cody

Tupelo, Miss., Jan. 23 – Exela Technologies, Inc.’s paper (Caa3/CCC-) is trading in the teens since the company missed payments due Jan. 17 on two bonds.

“It has one bond in our index maturing in 2026 and will enter our defaults list if the company fails to make the payments during the grace period,” according to a BofA Securities research note on Friday.

Subsidiary Exela Intermediate, LLC missed $57.5 million of payments due on its 11½% notes due 2026 and 10% first priority senior secured notes due 2023.

Bonds from Coinbase Global, Inc. continue to trade with handles in the high 50s to mid 60s.

Retailers also are facing pressure.

The retail high-yield default rate could reach 12% in 2023 from 0.2% at the end of 2022, according to a Fitch Ratings note on Monday.

Party City Holdco Inc.’s bankruptcy on Jan. 17 is the first registered in 2023.

Bed Bath & Beyond Inc. also “appears to be in imminent default, as the company prepares to file for Chapter 11 after canceling its distressed debt exchange, while Carvana Co., the largest retailer and second-largest issuer on our Top Market Concern Bonds list, is facing a liquidity crunch with $5.7 billion of unsecured bonds outstanding,” Fitch said.

In the prior week, the retail sector had the most downgrades, according to an S&P Global Ratings note on Monday.

Macy’s Retail Holdings LLC is on the default watchlist with its paper trading at 82, according to a BofA Securities report.

Kohl’s Corp. paper was trading in the low 70s since the retailer was dropped to junk by Moody’s Investors Service in December.

Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/CCC) added ½ point over the session but were down more than 5 points from a month ago.

Exela bonds soft

Exela Intermediate’s notes (Caa3/CCC-) were trading at the 17 bid range since the missed coupon payments, according to a BofA note.

The Exela Technologies subsidiary missed payments on Jan. 17 for its 11½% first priority senior secured notes due July 15, 2026 and its 10% first priority senior secured notes due July 15, 2023.

The 10% notes were trading at the 61 bid area on Jan. 6, according to Trace.

Exela Intermediate reported it expects to have sufficient funds to make the payments within the 30-day grace period.

The company’s paper was under pressure in 2022 with the 11½% notes moving at 30 bid back in July.

In June, Exela reported it closed on a $150 million three-year financing facility that replaced its existing securitization facility.

The Irving, Texas-based business process automation company also reported it has a hearing set for March 2 to appeal its stock delisting from the Nasdaq.

Exela said on Jan. 6 that its stock was delisted from the Nasdaq due to the share price falling below $1. The delisting has been stayed pending the outcome of the appeal.

Coinbase up from December

Coinbase’s 3 3/8% notes due 2028 (B1/BB-) were quoted wrapping the prior week around 65 bid, while the 3 5/8% notes due 2031 (B1/BB-) traded with a 58 bid handle, according to market sources.

The paper has seen some improvements since trading in December with handles in the mid-50s.

The Wilmington, Del.-based cryptocurrency exchange platform sold $1 billion of the notes due 2028 and $1 billion of the 2031 notes at par on Sept. 14, 2021.

S&P and Moody’s downgraded Coinbase earlier in January with heightened regulatory hurdles anticipated following cryptocurrency exchange FTX’s bankruptcy in November.

S&P said it estimates that Coinbase’s trading volumes hit a low point in December and were weak in the front half of January.

Rite Aid higher

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/CCC) added ½ point to head out at 52¾ bid, according to a market source.

The issue has softened from a 59 handle in December.

The Camp Hill, Pa.-based drug retailer completed two debt exchanges in 2022.

Distressed returns improve

S&P U.S. High Yield Corporate Distressed Bond index one-day returns ended Friday at 0.03% after wrapping Thursday at minus 0.72% on Thursday, Wednesday at 0.52% and 0.28% in the first session of the holiday-shortened week.

Month-, quarter- and year-to-date total returns were 7% on Friday, compared to 6.96% on Thursday, 7.74% mid-week and 7.18% on Tuesday.

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