Altice paper drops ‘like stone’; Michaels bonds climb; JoAnn soft; Rite Aid higher

By Cristal Cody

Tupelo, Miss., March 26 – Trading on Tuesday continued to center heavily on distressed paper in Altice France Holding Restricted Group and related subsidiaries.

“They’ve posted down 3 or 4 points today and are active,” a source said.

Altice’s bonds have given back over 30 points as the name dominated secondary volume in the junk and distressed markets since last week.

Altice France Holding SA’s 10˝% senior notes due 2027 (Caa2/CCC) declined around 4 points on Tuesday to a handle in the 30s.

The bonds had hit a high point this month just last week on March 20 when the issue was quoted at 70˝ bid, 71˝ offered.

“They’ve been dropping like a stone since then,” the source said.

One of the day’s biggest gainers was distressed arts and crafts retailer Michaels Cos, Inc., which rallied around 3˝ points to 4˝ points on more than $50 million of paper changing hands after the company announced positive earnings results, sources reported Tuesday.

“Michaels Store was up a lot today,” a source reported. “The bonds are improved.”

The 7 7/8% senior notes due 2029 (Caa2/CCC-) traded nearly 10 points better on the day at one point before pulling back on some of the gains and going out over 5 points better.

Retail has been under pressure in 2024 with the latest Chapter 11 bankruptcy announced last week from fabric and craft chain Joann Inc.

Joann does not have outstanding bonds but does have around $1.15 billion of long-term debt, including loans.

The Hudson, Ohio-based company’s term loan was last seen trading in the prior week at 5˝ bid, 6˝ offered, a source said.

Joann plans to become privately owned following the bankruptcy process, which could be completed as early as late April.

Rite Aid Corp.’s 8% senior secured notes due 2026 perked up on Tuesday as the drugstore chain reported during a bankruptcy court hearing that it reached a settlement with lenders, the U.S. Justice Department and others that could allow it to complete the bankruptcy process in April.

Overall secondary action in the name was “minimal” as details regarding the settlement were sparse, a source said.

Stock indices ended the day lower.

The S&P 500 index declined 0.28%, while the iShares iBoxx High Yield Corporate Bond ETF shifted down 9 cents, 0.12%, to $77.49.

The CBOE Volatility index was marginally higher at 13.24, up 0.38%.

Altice losses continue

Altice’s paper turned softer again on Tuesday after eking out small gains on Monday and traded down 3 or 4 points by the close, sources said.

“The name has been very active,” one source said.

The bonds had mostly improved around 1 point to 4 points on Monday on reports that an ad hoc group of secured creditors increased its holdings to $12 billion but still remained starkly lower since plunging last week following Altice France’s earnings report on Wednesday.

Altice France’s 10˝% senior notes due 2027 (Caa2/CCC) went out Tuesday lower at 36 bid, 37 offered.

The bonds closed out Monday 4 points higher at 40 bid, 41 offered, down from 70˝ bid, 71˝ offered in the prior week.

The issue slid over 35 points last week as concerns engulfed the company amid market chatter the company hired financial and legal advisers.

Altice France’s 6% senior notes due 2028 (Caa2/CCC) were quoted Tuesday afternoon at 26 bid, 27 offered, down from 30 bid, 31 offered in the prior session.

The notes have dropped over 30 points since last week.

Altice USA’s bonds also have been volatile this year on continued market chatter that Charter Communications Inc. may acquire the New York-based broadband communications company.

Michaels moves up

Michaels’ bonds were seen around 3˝ points to 4˝ points higher on more than $50 million of paper changing hands by the close, sources reported on Tuesday.

The 7 7/8% senior notes due 2029 (Caa2/CCC-) went out over 5 points stronger at 72 bid, 73 offered after trading as high as 75 bid, 76 offered over the session.

The issue was quoted on Monday at 66˝ bid, 67˝ offered.

Michaels’ notes have improved around 12 points since mid-February.

The Irving, Tex.-based arts and crafts retailer was taken private in 2021 by funds managed by Apollo Global Management, Inc. affiliates.

Rite Aid higher

Rite Aid’s 8% senior secured notes due 2026 traded about ˝ point better on Tuesday as the company moves further along the Chapter 11 bankruptcy process, but activity was thin, a source said.

The bonds were quoted at 66 bid, 67 offered, up from 65˝ bid, 66˝ offered on Monday.

Rite Aid’s paper has softened around 5 points year to date.

A hearing to consider conditional approval of the adequacy of Rite Aid’s disclosure statement will be held on Thursday in the U.S. Bankruptcy Court for the District of New Jersey.

A hearing for the sale of Rite Aid’s Health Dialog assets was held on Tuesday.

The Philadelphia-based drugstore chain has announced the closure of more than 200 stores since its Oct. 15, 2023 Chapter 11 bankruptcy filing.

Distressed returns negative

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved modestly on Monday to negative 0.14% after closing Friday at minus 0.23% and from minus 0.13% in the same session a week ago.

Month-to-date total returns declined to negative 0.29% at the start of the week from minus 0.15% on Friday and 1.24% in the week-ago session.

Year-to-date total returns fell to 2.32% on Monday from 2.47% ahead of the weekend and 3.89% the same day a week ago.

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