Rite Aid bonds pick up steam in heavy trading; iHeartMedia softens; Level 3, Lumen rise

By Cristal Cody

Tupelo, Miss., Oct. 25 – Rite Aid Corp.’s 8% senior secured notes due 2026 (/D/CC) dominated secondary action in the distressed market on Wednesday.

The issue also was among the most active higher-rated junk bonds traded with $19 million of volume racked up, a source said.

The bankrupt retailer’s notes were heading out 3/8 point better and trading about 6 points stronger since the company’s Oct. 15 Chapter 11 bankruptcy filing.

Meanwhile, iHeartCommunications, Inc.’s 8 3/8% senior notes due 2027 (Caa1/CCC+) fell 1/8 point in active supply over the session.

Overall market tone slipped as stocks sold off and Treasury yields climbed. The benchmark 10-year Treasury note yield jumped 11 basis points to 4.95%.

The S&P 500 dropped 1.43%, while the Nasdaq slid 2.43%.

The iShares iBoxx High Yield Corporate Bond ETF fell 39 cents, or 0.54%, to $72.20.

Measured market volatility was less than 10% higher on Wednesday. The CBOE Volatility index rose 6.43% to 20.19.

In other distressed names, bonds from Level 3 Financing, Inc. and parent Lumen Technologies, Inc. mostly traded stronger on Wednesday.

Level 3’s 4 5/8% senior notes due 2028 (B3/CCC+/B) rallied 2½ points, while Lumen’s 4% senior secured notes due 2027 (Caa2/B) traded 1¼ points better.

Rite Aid stronger

Rite Aid’s 8% senior secured notes due 2026 (/D/CC) added 3/8 point on Wednesday to 71½ bid in strong trading that totaled $19 million, a source said.

The notes have been among the most active junk bonds traded this week.

The issue added 1/8 point on Tuesday on $12 million of secondary volume and 1½ points on Monday on more than $15 million of activity.

Rite Aid’s notes have climbed about 6 points from where the issue traded ahead of the company’s Oct. 16 bankruptcy announcement.

The Philadelphia-based retailer reported that it has obtained commitments for $3.45 billion of debtor in possession facilities to help fund continuing operations.

iHeartMedia lower

iHeartCommunications’ 8 3/8% senior notes due 2027 (Caa1/CCC+) declined 1/8 point on more than $8 million of bonds changing hands on Wednesday, a source said.

The notes were quoted at 65¼ bid.

iHeartCommunications’ paper has declined from trading with a 74 bid handle in mid-September.

San Antonio-based media broadcasting company iHeartMedia, Inc. shares (Nasdaq: IHRT) fell 4.6% on Wednesday to $2.28.

iHeartMedia will report third-quarter earnings results on Nov. 9.

Level 3, Lumen higher

Level 3’s 4 5/8% senior notes due 2028 (B3/CCC+/B) rallied 2½ points to 69¼ bid by the end of the session, a source said.

Trading topped $8 million on Wednesday in the company’s most active issue over the day.

Lumen’s 4% senior secured notes due 2027 (Caa2/B) also traded 1¼ points better at 66½ bid on $7.4 million of volume.

Lumen’s notes added ½ point in the prior session on $4 million of secondary supply.

The Denver-based telecommunications company will report third-quarter earnings results on Oct. 31.

Distressed returns gain

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Tuesday to 0.32% from 0.1% on Monday.

Month-to-date total return losses narrowed to minus 3.7% in the prior session versus minus 4.01% on Monday.

Year-to-date distressed total returns also rose to 13.42% on Tuesday from 13.05% at the start of the week.

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