Carvana paper edges down; AMC bonds improve; DISH Network mixed; Rite Aid notes up

By Cristal Cody

Tupelo, Miss., March 23 – Carvana Co.’s notes fell about 1/3 point to ¾ point in the session after the company launched an exchange offer for five series of senior notes.

Carvana’s 5 5/8% senior notes due 2025 (Caa2/CCC) gave back ¾ point after the paper rallied about 10 points on Wednesday.

Carvana’s exchange offer is for up to $1 billion of its $5.72 billion senior notes outstanding.

The online car retailer’s estimated net sales of $2.4 billion to $2.6 billion for the first quarter of 2023 are “below consensus estimates” of $2.68 billion and would be down 28.5% year over year at the midpoint of guidance, D.A. Davidson & Co. analyst Michael Baker said in a note on Thursday.

Carvana’s first-quarter total net sales are being modeled at $2.46 billion, down 29.4% from the prior year and a 24.4% decline from the fourth quarter of 2022, according to the note.

Meme stock company AMC Entertainment Holdings, Inc.’s bonds saw heavy trading during the session.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) picked up 2¼ points on $23 million of volume.

Stocks turned positive on Thursday after selling off following the Federal Reserve’s rate hike the previous day.

The S&P 500 index improved 0.3%.

The iShares iBoxx High Yield Corporate Bond ETF fell 29 cents to $73.75.

Volatility was marginal with the CBOE Volatility index up 1.57% at 22.61.

DISH Network Corp.’s paper went out mixed but mostly higher in strong trading over the session.

Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/CCC-/CCC) traded 2 points better on Thursday, while the issuer’s credit default swap spreads moved out past 6,000 basis points this week.

Carvana notes dip

Carvana’s 5 5/8% senior notes due 2025 (Caa2/CCC) gave back ¾ point to head out at 62¼ bid on $5 million of paper traded on Thursday, a source said.

The issue went out Wednesday about 10 points better.

Carvana’s 10¼% senior notes due 2030 (Caa2/CCC) also were down ¼ point at 52 bid on $3.9 million of secondary supply.

The notes traded mostly flat in the prior session.

The Tempe, Ariz.-based online car retailer announced Wednesday an exchange offer for five tranches of notes, including the 5 5/8% and 10¼% issues, for up to $1 billion of new 9%/12% cash/PIK toggle senior secured second-lien notes due 2028.

AMC first-liens up

AMC Entertainment’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) rallied 2¼ points on heavy trading totaling $23 million on Thursday, a source said.

The bonds were quoted at 65½ bid.

AMC announced March 14 that shareholders approved its share increase and reverse split proposals.

AMC held a special meeting for shareholders of its common stock and preferred equity to vote to increase the number of authorized shares of common stock and to approve an amendment for a reverse stock split that also will permit the full conversion of all outstanding shares of series A preferred stock into shares of common stock.

The company faces a lawsuit from Allegheny County Employees’ Retirement System in the Delaware Court of Chancery regarding the issuance of the preferred equity with a court date set for April 27.

AMC said it cannot implement the shareholder vote until the court ruling.

The Leawood, Kan.-based movie theater owner completed a distressed debt-for-equity swap in February.

DISH mostly higher

DISH’s 5 7/8% senior notes due 2024 (B3/B) rose ½ point to 84¾ bid on about $12 million of trading on Thursday, while the 5 1/8% notes due 2029 (B3/B) fell nearly ½ point to the 52 bid area on $12.4 million of volume, a source said.

DISH’s 7¾% senior notes due 2026 (B3/B) went out more than ½ point better at 66 bid on $10.8 million of bonds changing hands.

The Englewood, Colo.-based satellite cable operator’s CDS spreads also tightened 42 bps over the past week ended Wednesday to 1,622 bps, according to a Moody’s Investors Service report.

Rite Aid lifted

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/CCC) were lifted over the session, going out 2 points better at 46½ bid, a source said.

Secondary supply was light at $1.25 million.

However, Rite Aid’s CDS spreads moved out to wider than 6,000 bps this week, according to a Moody’s report.

The Camp Hill, Pa.-based drugstore chain’s CDS spreads eased 461 bps over the past week ended Wednesday to 6,298 bps.

Distressed index down

S&P U.S. High Yield Corporate Distressed Bond index one-day returns declined on Wednesday following the Federal Reserve’s rate hike.

One-day returns were minus 0.2%, down from 0.15% on Tuesday but up from minus 0.57% on Monday.

Month-to-date return losses widened to minus 4.74% from minus 4.55% on Tuesday and minus 4.69% at the start of the week.

Quarterly and year-to-date total returns declined to 3.93% on Wednesday, compared to 4.14% on Tuesday and 3.99% on Monday.

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