Rite Aid notes edge lower; DISH flat to softer in quieter trading; Telesat paper higher

By Cristal Cody

Tupelo, Miss., Aug. 11 – Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/CCC-/B) edged down ¼ point Friday in active trading, though the distressed notes went out as one of the week’s top junk gainers.

DISH Network Corp. paper was unchanged to more than 1 point lower in much lighter trading after about $400 million of the company’s paper changed hands in the prior two sessions, a source said.

Trading supply was under $12 million Friday as the buying frenzy sparked by DISH’s announcement Tuesday that it will merge with EchoStar subsided.

DISH’s 5 1/8% senior notes due 2029 (Caa2/B-) stayed flat over the session on $5.6 million of volume.

Bonds from DISH and Rite Aid were among the week’s top gainers, according to a BofA Securities note on Friday.

DISH’s bonds were up more than 6 points on the week.

Rite Aid’s notes were quoted over 6.2 points better on the week.

The distressed space actually “has performed best so far this year,” BofA credit strategist Oleg Melentyev said in the note, adding there is an estimated $100 billion of defaults ahead.

Markets were mixed Friday as volatility pulled back.

The CBOE Volatility Index dropped 6.37% to 14.84.

The S&P 500 index closed off 0.11%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 11 cents, or 0.15%, to $74.83.

Telesat Corp. paper climbed Friday after the company posted strong second-quarter earnings.

Telesat Canada’s 4 7/8% senior secured notes due 2027 (B3/D) jumped over 4½ points on $9.25 million of volume.

The company’s stock shot up 53%.

Rite Aid edges down

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) fell ¼ point to 57 bid on $8 million of trading Friday afternoon, a market source said.

The notes gave back 1¼ points on $2 million of trading Thursday.

Rite Aid’s issue was holding on to gains made at the start of the week.

The bonds went out in the prior week around 52 bid, 53 offered.

Rite Aid’s credit default swaps spreads have widened more than 2,000 basis points in the past two weeks.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) closed up 8.96% to $2.31 on Friday in steady activity.

DISH flat to lower

DISH DBS Corp.’s 5 1/8% senior notes due 2029 (Caa2/B-) were flat at 59 bid on $5.6 million of volume Friday, a market source said.

The issue dropped 2 points in Thursday’s session on $31 million of trading and added 4½ points Wednesday on $18.75 million of supply.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) fell 1 1/8 points to 77 7/8 bid on $6 million of activity Friday.

The issue went out Thursday ¼ point better on $61.65 million of secondary trading.

The company’s bonds were heavily traded Wednesday and Thursday following DISH’s report Tuesday that it plans to merge with EchoStar.

Secondary volume in DISH paper totaled about $415 million on Wednesday and Thursday.

DISH’s CDS spreads came in over 600 bps to more than 700 bps this week.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) declined 1.23% Friday to $8.06 in light trading.

Telesat climbs

Telesat paper was strongly traded over the day after the company posted second quarter earnings results, a source said.

Telesat Canada’s 4 7/8% senior secured notes due 2027 (B3/D) jumped over 4½ points to a 64-bid handle on $9.25 million of volume.

The 5 5/8% senior secured notes due 2026 (B3/D) rose 4¼ points to 67¼ bid on $2.25 million of trading.

The Ottawa-based satellite operator reported Friday that second-quarter revenue declined 4% to C$180 million, while income hit C$520 million, up from a loss of C$4 million in the same quarter last year.

Telesat’s stock (Nasdaq: TSAT) soared 53.49% to $12.97 in heavy trading totaling 23 million shares. Average volume is around 28,000 shares.

Distressed index moderates

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined to 0.18% on Thursday from 1% on Wednesday, 0.3% Tuesday and 0.35% on Monday.

Month-to-date total returns rose to 1.69% in the prior session from 1.5% on Wednesday, 0.49% on Tuesday and 0.2% at the week’s start.

Year-to-date distressed total returns improved to 16.88% Thursday, compared to 16.66% on Wednesday, 15.5% on Tuesday and 15.16% on Monday.

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