DISH bonds mixed in quieter market; Michaels under pressure; QVC paper flat to lower

By Cristal Cody

Tupelo, Miss., Oct. 4 – Some distressed bonds saw a turnaround out of the gate on Wednesday after Tuesday’s heavy sell-off but remained under pressure over the day and went out steady to weaker.

Volatility in DISH Network Corp.’s bonds receded somewhat after heavy selling on Tuesday sent the bonds down about 2 points or more.

DISH’s paper was mixed on Wednesday in light trading.

The 7¾% senior notes due 2026 (Caa2/B-) were modestly weaker after dropping more than 3 points on Tuesday following the FCC’s announcement it had levied its first space debris enforcement action against DISH.

Stocks improved with some gains in the junk market after Treasury yields pulled back on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF added 37 cents, or 0.51%, to $72.52.

The benchmark 10-year Treasury note yield, which hit 4.8% on Tuesday, fell 6 basis points to 4.73% on Wednesday.

Volatility moved lower over the session. The CBOE Volatility index declined 6.07% to 18.58.

Cboe Global Markets, Inc. and S&P Dow Jones Indices announced on Tuesday plans to launch four new Credit Volatility Indices tracking corporate bonds, including in the high-yield and investment-grade markets, on Oct. 13.

“Similar to the VIX index, the new Credit VIX Indices are designed to track near-term uncertainty around corporate credit risk by measuring the market's expectation of how volatile credit default swap index spreads will be over the next 30 days,” according to the notice.

Distressed retail names stayed mostly under pressure on Wednesday with bonds from Rite Aid Corp. and Michaels Cos., Inc. lower, a source said.

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) had declined about ½ point during the session following a downgrade from S&P Global Ratings but improved by the close to head out unchanged.

The notes, though, were down about 3 points from last week.

Home shopping network QVC Inc.’s 5.45% senior secured notes due 2034 (B2/B-/B+) dove 2 points over the session before recovering to head out flat on the day.

QVC’s 4¾% notes due 2027 fell more than 1 point over the session.

DISH notes mixed

DISH DBS Corp.’s 7¾% senior notes due 2026 (Caa2/B-) stayed modestly weaker near the 68¾ bid area on Wednesday on more than $15 million of volume in the company’s most active issue seen trading, a source said.

The bonds gave back more than 3¾ points in heavy trading after the FCC announced its first space debris enforcement action was taken against DISH.

DISH’s 5 1/8% notes due 2029 Caa2/B-) were up about ½ point around 51½ bid on over $8 million of activity on Wednesday.

On Tuesday, the issue was quoted down around 3 points.

DISH’s 7 3/8% senior notes due 2028 (Caa2/B-) also were about ½ point softer at just under 59 bid on more than $2 million of trading on Wednesday.

The bonds had declined 2 points on Tuesday.

The FCC announced on Monday a settlement with the Englewood, Colo.-based satellite cable operator that includes a penalty of $150,000 and an admission of liability for failure to properly deorbit its EchoStar-7 satellite.

Michaels steadies

Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) were down about ½ point in early trading on Wednesday but recovered by the close to head out flat at 63½ bid on more than $3 million of paper traded, a source said.

The bonds have declined about 3 points over the past week.

S&P said Wednesday it lowered the ratings on the Irving, Tex.-based arts and crafts retailer and its secured and unsecured senior bonds on the view of expected weaker performance.

QVC notes mixed

QVC’s 5.45% senior secured notes due 2034 (B2/B-/B+) dropped 2 points during the session before the issue recovered to go out unchanged in light trading, market sources said.

The notes were quoted flat at 41¾ bid.

The issue gave back about 1¾ points in Tuesday’s sell-off.

QVC’s 4¾% notes due 2027 fell over 1 1/8 points to 58 5/8 bid by the close on Wednesday.

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

Distressed returns plunge

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns sank on Tuesday in the market-wide sell-off.

Returns plunged to minus 1.68% from minus 0.73% on Monday.

Month-to-date total returns were at minus 2.4% on Tuesday after coming in at minus 0.73% in the first session of October.

Year-to-date distressed total returns dropped to 14.94% from 16.91% on Monday.

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