CCC-rated credits eyed; AMC Entertainment notes add to losses; Michaels paper active

By Abigail W. Adams

Portland, Me., Jan. 5 – The distressed debt space firmed on Friday after a brutal start to the new year.

The market was largely unchanged after selling over the past three sessions drove the S&P U.S. High Yield Corporate Distressed Bond index’s year-to-date returns down 1.59%.

However, the heavy selling on Tuesday and Wednesday subsided on Thursday with the index down 0.12%.

Market players entered the year apprehensive about distressed credits amid an anticipated economic downturn in 2024.

However, the still strong labor market reflected in the latest U.S. nonfarm payrolls report, which came in hotter than expected, was a boon to the CCC space, which outperformed in 2023 amid stronger-than-anticipated economic conditions.

While the broader market firmed on Friday, default candidates remained shunned, with losses mounting for AMC Entertainment Holdings, Inc.’s senior notes.

The movie theater operator’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were off another 1˝ point. They were wrapped around 81 1/8 heading into the market close, a source said.

Michaels Cos, Inc.’s 7 7/8% senior notes due 2029 (Caa2/CCC-) were active although largely unchanged after being driven down 1˝ to 2 points earlier in the week.

The 7 7/8% notes were trading in the 61˝ to 62 context, a source said.

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