QVC notes lower; Bausch Health, Community Health paper up; WeWork better; Talen softens

By Cristal Cody

Tupelo, Miss., April 14 – QVC Inc.’s paper soured a bit on Friday after climbing about 3 points to more than 7 points on Thursday.

QVC’s 4.45% senior secured first-lien notes due 2025 (B2/B-/B+) declined around 1¼ points on $7.25 million of volume.

In the distressed health care space, Bausch Health Cos. Inc.’s paper traded about ¼ point to 1 point higher.

Community Health Systems Inc.’s 6 1/8% notes due 2030 (Caa2/CCC-) also improved more than 3 points.

Bank earnings were in focus on Friday with first-quarter releases out from JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.

The S&P 500 index softened 0.21%.

The iShares iBoxx High Yield Corporate Bond ETF fell 14 cents, or 0.19%, to $75.28.

The CBOE Volatility index was down 4.1% at 17.07.

Fitch Ratings said Friday the high-yield trailing 12-month default rate finished March at 1.8%, up 20 basis points from 1.6% in February 2023.

“March defaults modestly exceeded our expectations, primarily due to the inclusion of $3.4 billion of SVB Financial Group’s obligations,” Fitch said. “We expect the HY default rate to end April roughly flat with March, with National CineMedia’s Chapter 11 filing and FXI Holdings Inc. and Diebold Nixdorf Inc. slated to complete their respective distressed debt exchanges.”

Fitch noted that WeWork Inc., which also announced a distressed debt exchange, “should contribute to May’s defaults.”

WeWork’s 7 7/8% senior notes due 2025 (CC) traded around 1½ points higher on Friday but were going out about 8 points lower on the week.

Fitch forecasts a 2023 default rate of 3% to 3½%, up from ½% in 2021 and 1.3% in 2022.

So far this year, bankruptcies have been in the retail, technology and media sectors, according to a BofA Securities note on Friday.

Other retailers considered default candidates include QVC, Rite Aid Corp. and Staples Inc., BofA said.

Bed Bath & Beyond Inc. is “not looking so good,” as the company seeks additional funding to ward off filing for Chapter 11, a market source said.

The stock dropped more than 7% on Friday to finish at less than a quarter.

Meanwhile, Talen Energy Corp.’s bonds rallied at the start of the week but were finishing down more than 3 points, sources said.

The company has a common equity rights offering that expires Tuesday, according to a market source.

“They’re supposed to exit bankruptcy next month,” the source said.

Talen’s 10½% senior notes due 2026 had improved about 1 point from the prior week to 33 bid, 35 offered on Tuesday but softened over the back half of the week and were last seen lower on a 29 handle.

Talen reported April 5 its restructuring plan includes the infusion of new equity capital through a common equity rights offering of up to $1.55 billion.

The Houston-based energy company filed bankruptcy nearly a year ago in May 2022.

QVC notes soften

QVC’s bonds slipped about ½ point to more than 2 points in mostly light trading on Friday, a source said.

QVC’s 4.45% senior secured first-lien notes due 2025 (B2/B-/B+) declined around 1¼ points to 75¾ bid on $7.25 million of volume.

The notes had rallied 6 points in Thursday’s trading.

QVC’s 5.95% notes due 2043 (B2/B-) shed nearly ½ point to the 47 bid area on $5.4 million of trading on Friday.

The 4 3/8% senior secured notes due 2028 (B2/B-/B+) also were down more than 2 points at 53 bid in thin trading.

On Thursday, the issue rallied over 3 points to a 55 bid handle on $23.9 million of volume.

Qurate Retail Inc.’s credit default swap spreads tightened nearly 400 bps this week.

QVC is a subsidiary of the West Chester, Pa.-based home shopping network company.

Bausch improves

Paper from Bausch Health and affiliates traded higher on Friday, market sources said.

Bausch’s 11% senior secured notes due 2028 (Caa1/CCC+/B) were quoted up 1 point at 78½ bid on $5 million of trading.

Bausch Health Americas, Inc.’s 8½% senior secured notes due 2027 (Ca/CCC-/CC) went out about ¼ point better at 48½ bid.

The Laval, Quebec-based pharmaceutical company’s stock finished the day 0.66% lower at $7.49.

Community Health gains

Community Health’s 6 1/8% notes due 2030 (Caa2/CCC-) traded more than 3 points better on a 65 bid handle on light activity totaling $2.1 million on Friday, a source said.

The company will report first-quarter earnings results on May 1.

The Franklin, Tenn.-based operator of acute care and outpatient facilities has announced the sale or divesture of four hospitals and medical centers year to date.

WeWork higher

WeWork’s 7 7/8% senior notes due 2025 (CC/C) saw improvement on Friday after pressure in the prior sessions but trading was light, a source said.

The notes were quoted 1½ points higher with a 43 bid handle on $2 million of trading.

The bonds were going out about 8 bps lower on the week.

WeWork’s stock hit new consecutive record lows this week.

Shares closed Friday down 4.98% at 49 cents on double the average trading volume.

WeWork will release first-quarter earnings results on May 9.

The New York-based office share company’s securities have declined since the company launched exchange offers and consent bids for two tranches of notes on April 3.

Bed Bath & Beyond flat

Bed Bath & Beyond’s bonds remained little changed this week, sources said.

The 4.915% senior notes due 2034 and 5.165% senior notes due 2044 were quoted trading around the 7, 8 bid range.

Bed Bath & Beyond has announced several transactions this year to raise funding, including the issuance of preferred stock warrants, to pay missed interest payments.

The company will hold a special shareholders meeting on May 9 to vote on its plan for a reverse stock split.

The Union, N.J.-based home products retailer’s stock dropped 7.17% to close at 23 cents.

Distressed index positive

S&P U.S. High Yield Corporate Distressed Bond index one-day returns softened but remained positive on Thursday at 0.55%.

One-day returns were 0.62% on Wednesday, 0.24% on Tuesday and 0.06% on Monday.

Month-to-date returns improved on Thursday to 1.31%, compared to 0.76% on Wednesday, 0.14% on Tuesday and minus 0.11% at the week’s start.

Year-to-date total returns rose to 5.89% in the prior session from 5.32% on Wednesday, 4.66% on Tuesday and 4.41% on Monday.

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