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Rite Aid gains; Michaels improves; AMC bonds climb; distressed returns outpace markets
By Cristal Cody
Tupelo, Miss., Oct. 10 – Distressed retail paper saw some of the biggest gains on Tuesday in overall subdued trading in the first session back after the Columbus Day holiday.
Rite Aid Corp.’s 7½% senior secured notes due 2025 (Caa3/C) traded at 63¾ bid on $5 million of supply going out, a source said.
The notes have added about 2½ points since Thursday.
Michaels Cos., Inc.’s bonds also continued to recover on Tuesday from last week’s losses.
Michaels’ 7 7/8% senior notes due 2029 (Caa2/CCC-) traded about 1¼ points higher at 62¼ bid on $15 million of volume, a source said.
The S&P U.S. High Yield Corporate Distressed Bond index remained soft ahead of the holiday weekend, but year-to-date distressed total returns were near 15%, while the U.S. high-yield corporate bond index has year-to-date returns of under 5% and the investment-grade corporate bond index has negative returns of more than 1% so far this year.
Meanwhile, Fitch Ratings said in a report that it has revised its fiscal year 2023 junk default forecasts downward to 3% to 3½% from 4½% to 5%.
Back in the secondary market, AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) held onto Friday’s gains and climbed 2 more points to a 79 bid handle on $18.5 million of volume on Tuesday, a source said.
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