Rite Aid bonds down after quarterly results; Carnival paper up on strong fourth quarter

By Cristal Cody

Tupelo, Miss., Dec. 21 – Distressed secondary activity continued to thin on Wednesday as desks clear ahead of the holidays and year-end.

Rite Aid Corp.’s 7½% senior secured notes due 2025 (B3/CCC-/CCC) softened ¾ point in light trading after the drug store chain reported fiscal 2023 third-quarter results, a source said.

Carnival Corp. & plc’s bonds saw much of the secondary action Wednesday after the cruise line operator posted improved fourth-quarter earnings.

The notes were trading about 2¼ points to more than 3 points better on more than $86 million of secondary supply, a source said.

The junk space got a lift on Wednesday as markets turned positive and stocks climbed more than 1%. The S&P 500 closed up 1.49%.

The iShares iBoxx High Yield Corporate Bond ETF rose 63 cents, or 0.85%, to $74.66.

Volatility was softer as Ukrainian president Volodymyr Zelenskyy met with U.S. president Joe Biden in Washington on Wednesday.

The CBOE Volatility index fell about 7% to $20.05.

Rite Aid lower

Paper from drugstore chain Rite Aid softened over the day after the retailer reported fiscal 2023 third-quarter results, a market source said.

The company’s 7½% senior secured notes due 2025 (B3/CCC-/CCC) declined ¾ point to head out at 69½ bid on $1.25 million of volume.

Rite Aid completed a cash tender offer earlier in December for up to $200 million of the 7½% notes.

The Camp Hill, Pa.-based drug retailer on Wednesday reported fiscal 2023 third-quarter revenue softened to $6.08 billion from $6.23 billion in the prior year. Quarterly losses climbed to $67.1 million, or $1.23 a share, from $36 million, or 67 cents a share, a year ago.

Carnival notes up

Carnival’s 10½% notes due 2030 (B3/B) added 3 3/8 points to go out the door at 83 5/8 bid on $10.5 million of paper traded on Wednesday, a source said.

The company’s 6% notes due 2029 (B3/B) rose 2¼ points to a quote of 68½ bid on nearly $12 million of secondary volume.

Carnival said Wednesday that fourth-quarter revenue climbed to $3.8 billion from $1.28 billion a year ago.

The Miami-based cruise operator also had a fourth-quarter loss of $1.6 billion, or $1.27 a share, but losses were improved from a loss of $2.62 billion, or $2.31 a share, posted in the same quarter last year.

Distressed index lower

S&P U.S. High Yield Corporate Distressed Bond index one-day returns fell to minus 0.49% on Tuesday from minus 0.29% on Monday.

Month-to-date total returns declined to 0.18% on Tuesday from 0.67% at the week’s start.

Year-to-date total returns were down at minus 25.31% on Tuesday versus minus 24.94% on Monday.

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