Rite Aid bonds down; Talen notes improve; GPS Hospitality edges up; At Home notes mixed

By Cristal Cody

Tupelo, Miss., April 18 – Distressed paper saw mixed reactions on Monday in mostly light post-Easter secondary trading.

Rite Aid Corp.’s notes gave back over 2 points in the first session back after the company reported heavy fourth-quarter losses on Thursday.

Talen Energy Supply LLC’s paper improved about 5/8 point to 1¾ points in light trading over the day.

Market tone was weaker in post-Easter trading and amid a heavy calendar of earnings reports due over the session. The iShares iBoxx High Yield Corporate Bond ETF was off 13 cents at $80.11.

Oil continued to climb on Monday.

West Texas Intermediate crude oil benchmark futures for May delivery settled up $1.26 to $108.21 a barrel.

Burger King and Pizza Hut franchise owner GPS Hospitality Holding Co. LLC’s senior secured bonds were actively traded over the day.

Home decor chain owner At Home Group Inc.’s 7 1/8% senior notes due 2029 (Caa1/CCC+) continued to trade heavily on Monday but were mostly flat on the day.

Rite Aid notes soften

Rite Aid’s notes slumped over 2 points in mostly light trading following the company’s weak fourth-quarter report last week, a source said Monday.

The company’s 8% senior secured notes due 2026 (B3/CCC/BB-) dropped over 2½ points in Monday’s session, heading out at a print of 88.18 on $7 million of paper traded, a source said.

The company’s bonds had improved about 7/8 point to 1 point following its weak earnings announcement in the short trading session on Thursday.

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC/CCC) were down about 2¼ points at a print of 72.71 on thin trading supply of $1 million.

Rite Aid’s 7½% senior secured notes due 2025 (B3/CCC/BB-) fell nearly 2½ points to the 88½ bid area on $1 million of volume.

The drug retailer’s notes softened ahead of the earnings report after a Deutsche Bank analyst report slashed the company’s stock price target to $1.

On Thursday, the Camp Hill, Pa.-based drugstore company reported a fourth-quarter loss of $7.18 per share versus a loss of 34 cents a share a year ago.

Talen notes up

Talen’s notes saw gains in distressed secondary action on Monday, but overall paper traded was light, a source said.

The company’s 6½% senior notes due 2025 (C/CC/CCC) were quoted up 1¾ points at 34 5/8 bid on $2 million of volume.

The issue was over 3 points softer in the prior week.

Talen’s 10½% senior notes due 2026 (C/CC/CCC) improved 5/8 point to 33¾ bid on Monday. Secondary volume totaled $2 million in the issue.

Talen was downgraded by S&P Global Ratings on Thursday following a downgrade from Moody’s Investors Service a day earlier, citing the company’s unsustainable capital structure.

The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company’s senior notes dove to the low 20s in late March on reports the company is in restructuring talks.

Talen’s CDS spreads widened 242 bps over the past week ended Wednesday to 8,346 bps, a source said.

GPS lower

GPS Hospitality’s 7% senior secured notes due 2028 (Caa1/B-/B-) were up about ¼ point at 77¼ bid in active trading on Monday, a source reported.

The notes saw $7 million of secondary volume.

The issue has steadily declined from the par area in August and from 91 bid at the start of the year.

The Atlanta-based privately held company is a franchisee of Burger King, Pizza Hut and Popeyes Louisiana Kitchen restaurants.

At Home active

At Home Group’s 7 1/8% senior notes due 2029 (Caa1/CCC+) traded mostly flat on Monday at 76¾ bid on strong trading supply of $10 million, a source said.

The notes were seen trading in the short session on Thursday down over 6 points on $23 million of volume.

At Home’s 4 7/8% senior secured notes due 2028 (B1/B) also were 1½ points higher on Monday at 84 7/8 bid on $6 million of paper traded.

The Plano, Tex.-based company operates a chain of home decor stores in 40 states. At Home announced in January that it is constructing a new four-story headquarters in Dallas that is expected to be completed in December.

Distressed index soft

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return finished the short session on Thursday at minus 0.05%, compared to minus 0.04% on Wednesday, minus 0.46% on Tuesday and minus 0.59% at the week’s start.

Month-to-date total returns declined to minus 1.8% from minus 1.74% on Wednesday, minus 1.71% on Tuesday and minus 1.25% in the week’s first session.

Year-to-date index returns widened to minus 7.02% ahead of the holiday weekend, compared to minus 6.97% on Wednesday, minus 6.93% on Tuesday and minus 6.5% at the week’s start.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.