AMC bonds slide under secondary focus; Lumen mixed; Rite Aid flat, CDS spreads gap out

By Cristal Cody

Tupelo, Miss., Aug. 24 – AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) sank over 4 points as the bonds dominated the junk and distressed secondary market on Thursday.

The company’s paper has been on the slide this week, while its stock also plunged ahead of Thursday’s stock conversion and elimination of its preferred equity.

Bond volume hit $20 million just in the 10% tranche with the name overall attracting about $45 million of secondary trading, a source said.

AMC’s paper traded down over ¾ point to more than 4 points across the company’s debt.

Trading was more sparse in other distressed names over the session, sources reported.

Lumen Technologies, Inc.’s 4% senior secured notes due 2027 (Caa2/B) traded flat on Thursday on about $4 million of secondary action, while its 6 7/8% debentures due 2028 (Caa3/CCC-) rose about 2 points on $1.7 million of trading activity.

Market tone was weak with equities under pressure ahead of comments Friday from Federal Reserve chairman Jerome Powell at the Jackson Hole Symposium.

The S&P 500 index dropped 1.35% on the day.

The iShares iBoxx High Yield Corporate Bond ETF gave back 41 cents, or 0.55%, to $74.30.

The CBOE Volatility index climbed 7.63% on Thursday to 17.20.

Rite Aid Corp.’s bonds traded about ¼ point better on Thursday, while its credit default swap spreads gapped out by thousands of basis points for a second consecutive week.

Other distressed retail paper got a lift following a climb in retail sales last week, a source said.

Home shopping network QVC Inc.’s 5.45% senior secured notes due 2034 (B2/B-/B+) were up 1 point at 50¼ bid.

Parent Qurate Retail Inc.’s 8½% senior notes due 2029 (Caa2/CCC-) traded up ½ point to 39¾ bid.

A climb in retail sales last week helped boost the Federal Reserve Bank of New York’s weekly economic index reported Thursday.

The index rose to a preliminary estimate of 1.84% for the week ended Aug. 19 from 1.12% in the previous week and 1.28% a week earlier.

The bank said the increase was “due to rises in retail sales, steel production, tax withholding, railroad traffic, electricity output, and fuel sales and a decrease in initial unemployment insurance claims, which more than offset a fall in consumer confidence.”

AMC flounders on stock move

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) went out down 4 1/8 points at 70 bid on $20 million of paper changing hands on Thursday, a source said.

The yield was 25.64%, up from 21.77% on Monday.

The issue has given back about 6 points this week.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also were among the day’s most active junk names. The notes fell over ¾ point to a 68 bid handle on $15.6 million of trading. The yield was 16.39%.

AMC’s higher-rated junk bonds were lower, too. The 12¾% senior secured first-lien notes due 2028 (B3/B) issued via Odeon Finco plc fell 2 points to 98 bid on $3.8 million of volume. The yield was 13.36%.

The company had announced that on Thursday it would conduct a share increase and reverse stock split to allow the conversion of all of AMC’s outstanding preferred equity units into shares of class A common stock.

On Thursday, AMC filed to register 6,918,090 shares of class A common stock that will be issued as settlement shares at a ratio of one share of class A common stock for every 7½ shares of class A common stock on or soon after Monday.

The APEs are expected to be delisted from the New York Stock Exchange and cease trading on Friday.

AMC announced the conversion after the Delaware Court of Chancery earlier this month approved the settlement of a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over the issuance of its preferred stock.

AMC post-conversion shares (NYSE: AMC) opened Thursday at $19.60 and closed the session down 26.68% to $14.37.

On Wednesday ahead of the conversion, AMC’s common stock hit a new 52-week low at $1.94 in heavy trading and closed off 23.14% at $1.96.

The Leawood, Kan.-based movie theater owner’s preferred stock (NYSE: APE) declined 17.92% on Thursday to $1.42 ahead of the expected delisting.

Lumen notes flat to higher

Lumen Technologies’ 4% senior secured notes due 2027 (Caa2/B) traded flat on Thursday at 65½ bid on about $4 million of secondary action, a source said.

Lumen’s 6 7/8% debentures due 2028 (Caa3/CCC-) rose about 2 points to around 40½ bid on $1.7 million of trading activity.

The company’s paper has been mostly soft this week following a downgrade on Tuesday from Moody’s Investors Service.

Lumen’s CDS spreads tightened 753 bps this week ended Wednesday to 3,939 bps, Moody’s said.

The Denver-based telecommunications company’s stock (NYSE: LUMN) declined 1.32% to $1.50 on Thursday.

Rite Aid soft

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) added ¼ point to head out Thursday at 56¾ bid in thin trading, a source said.

The bonds were unchanged from the same session a week ago.

Rite Aid’s CDS spreads were another story.

The retail chain’s CDS moved out 5,776 bps to 22,116 bps for the week ended Wednesday, according to a Moody’s report.

In the prior week, Rite Aid’s CDS spreads gapped out 4,538 bps and had widened 1,069 bps in the previous week and 1,060 bps a week earlier.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) closed off 3.36% to $1.44 in light trading.

Distressed returns improve

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns were positive on Wednesday for the first time this week at 0.38%, compared to minus 0.18% on Tuesday and minus 0.09% on Monday.

Month-to-date total returns rose to 1.34% midweek from 0.96% on Tuesday and 1.14% on Monday.

Year-to-date distressed total returns improved to 16.48% on Wednesday versus 16.04% on Tuesday and 16.24% at the week’s start.

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