Distressed retail paper up in heavy supply; Staples, Michaels rally; Avaya slides

By Cristal Cody

Tupelo, Miss., Dec. 13 – Distressed retail paper got a lift on Tuesday as November inflation slowed more than expected.

Staples, Inc.’s 10¾% senior notes due 2027 (Caa2/CCC+) grabbed the bulk of distressed secondary action with the issue rallying 4 points on $21.5 million of volume.

The notes went out at 77¼ bid, a source said.

Two tranches of Michaels Cos., Inc.’s paper traded more than 3 points to nearly 6 points higher on Tuesday on more than $40 million of secondary supply, a source said.

The 7 7/8% senior notes due 2029 (Caa1/CCC) jumped more than 3 points on trading totaling nearly $17 million.

Markets welcomed the news that inflation improved more than expected in November.

Focus now is on the Federal Reserve’s rate decision due Wednesday with market participants predicting a hike of 50 basis points following four consecutive increases of 75 bps each.

In other distressed paper, Avaya Inc.’s 6 1/8% senior secured notes due 2028 (Caa2/CCC-/CCC) sank 10½ points after the company reported discussions with stakeholders in its convertible bonds and term loans.

The issue traded at 32 bid on $6.75 million of secondary volume, a source said.

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