U.S. Steel bonds drops after guidance cut; Rite Aid notes better on ratings upgrade

By James McCandless

San Antonio, Dec. 20 – Manufacturers and retailers took up the bulk of attention in the distressed debt market on Friday.

United States Steel Corp.’s notes dropped after the company announced a guidance cut, layoffs and other measures.

The 6¼% senior notes due 2026 fell 3 points to close at 88½ bid. The 6 7/8% senior notes due 2025 declined by 1½ points to close at 96 bid.

The Pittsburgh-based steel manufacturer made several announcements after the market close on Thursday.

The company said that it had reduced its guidance for fourth-quarter earnings, expecting a loss of $1.15 where analysts are expecting a 62 cent loss per share.

The company also reduced its dividend to 1 cent per share from 5 cents per share and will stop share buybacks.

Meanwhile, in retail, Rite Aid Corp.’s issues moved higher following a ratings upgrade for its unsecured notes.

The 6 1/8% senior notes due 2023 improved by 1 point to close at 89 bid. The 7.7% senior notes due 2027 rose 2¼ points to close at 75 bid.

During the session, S&P Global Ratings issued an upgrade for the Camp Hill, Pa.-based drug store chain.

Despite this, S&P maintains that the company’s capital structure is unsustainable.

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