Rite Aid secured notes up, CDS gap out; Lumen, Level 3 paper mixed; Lumen, Embarq widen

By Cristal Cody

Tupelo, Miss., July 20 – Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/CCC-/B) saw gains Thursday and on the week, while its credit default swap spreads moved out more than 450 basis points this week.

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) were about 2½ points higher on the week.

Bonds from Lumen Technologies, Inc. subsidiary Level 3 Financing, Inc. were mixed in active trading on Thursday, sources said.

“One issue is down; another issue is up,” a trader said.

Lumen’s 4% senior secured notes due 2027 (B3/BB-/BB) were quoted down more than 1 point since Tuesday.

Meanwhile, Lumen’s CDS spreads moved out “a lot” over the week, a source noted.

Lumen’s CDS spreads moved out nearly 700 bps and were among the widest seen in corporate issuers this week.

Former Lumen subsidiary Embarq Corp.’s CDS spreads also eased 592 bps for the past week ended Wednesday to 2,800 bps, according to a Moody’s Investors Service report.

The distressed secondary space seemed “tiresome” Thursday as the dog days of summer set in, a trader said.

Stock indices mostly weakened over the day with the Dow Jones industrial average among the exceptions.

The S&P 500 index closed down 0.68%.

The iShares iBoxx High Yield Corporate Bond ETF declined 33 cents, or 0.44%, to $75.18.

The CBOE Volatility index increased 1.67% to 13.99.

Rite Aid higher

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) traded up 1½ points to 46½ bid on $2 million of volume on Thursday, according to market sources.

The notes were up about 2½ points on the week.

The issue went out a week ago at 43 bid, 44 offered after trading as low as 39½ bid, 40½ offered earlier in the week following the issuer’s 10-Q regulatory filing.

Rite Aid’s CDS spreads widened another 451 bps over the past week ended Wednesday to 10,971 bps, according to Moody’s.

The company’s CDS spreads moved out more than 2,700 bps in the prior week.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) improved 3.95% on Thursday to $1.58.

Lumen, Level 3 mixed

Lumen Technologies’ 4% senior secured notes due 2027 (B3/BB-) were quoted with a 67 bid handle in secondary trading on Thursday, a source said.

The bonds were down more than 1 point from trading at 68½ bid on Tuesday.

Subsidiary Level 3’s 4 5/8% senior notes due 2027 (B1/B/B+) went out 1¼ points better on a 77 bid handle in strong trading totaling $18.6 million Thursday.

The 4¼% senior notes due 2028 (B1/B/B+) also were up about 1¾ points on a 71 bid handle in light trading totaling $2.6 million.

Lumen’s CDS spreads widened 679 bps over the past week ended Wednesday to 3,209 bps, Moody’s said.

The Denver-based telecommunications company plans to post its second-quarter earnings results on Aug. 1.

Lumen’s stock (NYSE: LUMN) closed up 0.53% at $1.90.

Distressed index soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns were minus 0.03% on Wednesday versus 0.03% on Tuesday and minus 0.51% on Monday.

Month-to-date total returns declined midweek to 1.6% from 1.64% on Tuesday and were flat from 1.6% at the week’s start.

Year-to-date distressed total returns were 13.42% in the prior session, compared to 13.46% on Tuesday and 13.42% on Monday.

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