Distressed trading thin; Carvana softens; DISH lower; AMC down; Staples off; Level 3 declines

By Cristal Cody

Tupelo, Miss., April 5 – The new 9% senior second-lien notes due 2029 (Caa2/B-) priced by Cloud Software Group Holdings Inc. took much of the day’s secondary action with the junk paper boasting trading volume of more than $260 million, a source said.

The notes were trading at 82 bid and yielding over 13%.

Distressed issues saw lighter trading action during the session as bank paper mostly improved, a source said.

Carvana Co.’s 10¼% notes due 2030 (Ca/C) dropped more than 3½ points on $1.1 million of trading.

DISH Network Corp. paper declined about ½ point to 2 points. The 7¾% notes due 2026 (B3/B) traded down 2 points on $2.3 million of volume.

AMC Entertainment Holdings, Inc.’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) fell 1¾ points on $3.4 million of trading.

Staples Inc.’s paper was back under pressure in one of the day’s most active issues. The 7½% notes due 2026 (B3/B) went out ½ point lower on $21.5 million of volume.

Stocks mostly declined Wednesday, sending the iShares iBoxx High Yield Corporate Bond ETF down 42 cents to $74.51.

Measured market volatility was marginally higher. The CBOE Volatility Index rose 0.42% to 19.08.

“Concerns about sudden bank runs have dissipated, and analysts (including those at Confluence) are now focusing on the new risk that banks are facing – a slow-motion loss of deposits as individuals and businesses look for higher-yielding places to store their funds,” according to a Confluence Investment Management note on Wednesday. “More broadly, the outflow of deposits from banks could eventually help prompt the Fed to begin cutting its benchmark fed funds interest rate.”

In other distressed paper, notes from Lumen Technologies, Inc. subsidiary Level 3 Financing, Inc. declined about 2 points to 3½ points in mostly light activity.

Carvana lower

Carvana’s 10¼% senior notes due 2030 (Ca/C) dropped more than 3½ points to 53 bid on $1.1 million of trading, a source said.

The Tempe, Ariz.-based online car retailer announced on March 22 an exchange offer for five tranches of notes for up to $1 billion of new 9%/12% cash/PIK toggle senior secured second-lien notes due 2028.

The exchange offer expires on April 19.

Carvana’s stock slid 10.53% to $8.50 on Wednesday.

DISH paper down

DISH’s notes were moving about ½ point to 2 points lower Wednesday in mostly light trading, a market source said.

The 7¾% notes due 2026 (B3/B) declined 2 points to 63½ bid on $2.3 million of volume during the session.

The issue was trading about 2½ points lower this week.

The Englewood, Colo.-based satellite cable operator’s stock closed down 1.4% at $8.53.

AMC softens

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) fell 1¾ points to 69½ bid on $3.4 million of trading Wednesday, according to a market source.

Trading action surged in the theater owner’s paper in late March on market chatter of a potential union with Amazon.com, Inc.

Market analysts, though, pegged a deal as unlikely.

AMC, a Leawood, Kansas-based movie theater owner, faces an April 27 court hearing over a lawsuit from Allegheny County Employees’ Retirement System in the Delaware Court of Chancery regarding its issuance of preferred equity.

The company’s stock was up 3.58% at $4.05.

Staples paper active

Staples’ 7½% notes due 2026 (B3/B) were one of the day’s most active issues trading on $21.5 million of volume, a source said.

The bonds went out ½ point lower at 87¼ bid and yielding over 12%.

Staples is a Framingham, Mass.-based office products retail company.

Level 3 pressured

Lumen subsidiary Level 3 Financing’s paper traded down about 2 points to 3½ points in light supply Wednesday totaling under $3 million, a source said.

The issuer’s 4 5/8% notes due 2027 (B1/B) dropped 3½ points to 56½ bid on $1.3 million of volume, a source said.

In March, Level 3 launched an offer to exchange eight series of senior notes for up to $1.1 billion of new 10½% senior secured notes due 2030.

The exchange offer expires April 13.

The Denver-based telecommunications company’s stock was trading Wednesday down a cent at $2.42, on the far side of the 52-week high of $12.54.

Distressed index weakens

S&P U.S. High Yield Corporate Distressed Bond index one-day returns declined Tuesday to minus 0.06% from 0.62% on Monday.

Month-to-date returns totaled 0.55% in the prior session.

Year-to-date total returns fell to 5.1% on Tuesday from 5.17% at the start of the week.

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