Distressed retail mixed; Staples notes decline, CDS spreads firm; Plains, CHS improve

By Cristal Cody

Tupelo, Miss., Sept. 15 – Retail paper remains in the cross-hairs of the distressed market with some issuers improving this week and others moving out, along with their credit default swap spreads, sources reported Thursday.

Kohl’s Corp.’s 5.55% senior notes due 2045 (Baa2/BBB-) traded mostly unchanged in light secondary activity on Thursday and were down about ½ point on the week, while the retailer’s CDS spreads eased more than 30 basis points this week.

Staples, Inc.’s 10¾% senior notes due 2027 (Caa2/CCC+) dropped 1½ points on Thursday.

The office retailer’s CDS spreads, meanwhile, tightened nearly 150 bps this week.

Stocks turned negative on Thursday with the S&P 500 index down 1.13% and the Nasdaq off 1.43%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 47 cents, or 0.63%, to $73.95.

Measured volatility barely budged over the day with the CBOE Volatility index up 0.42% at 26.27.

Oil prices gave back more than $3 on Thursday.

West Texas Intermediate crude oil benchmark futures for October deliveries settled down $3.38 at $85.10 a barrel.

Plains All American Pipeline, LP’s 6 1/8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Ba2/BB/BB) were active on Thursday and trading nearly ¾ point better on the day.

In other distressed issues, Community Health Systems Inc.’s paper improved ¾ point to 1 point on Thursday.

The 6 7/8% senior secured notes due 2029 (Caa2/CCC) rose ¾ point on $6 million of trading.

Kohl’s paper mostly flat

Kohl’s 5.55% senior notes due 2045 (Baa2/BBB-) traded mostly unchanged in light activity on Thursday, a source said.

The notes were at the 69½ bid range, off about ½ point on the week.

The bonds have declined from a 114 handle at the start of the year.

Kohl’s CDS spreads widened 31 bps over the past week ended Wednesday to 515 bps, according to a Moody’s Investors Service report on Thursday.

The Menomonee Falls, Wis.-based department store chain in July called off plans to place the company for sale.

Staples notes down

Staples’s 10¾% senior notes due 2027 (Caa2/CCC+) dropped 1½ points on Thursday to the 77½ bid area, a source said.

The notes were closing in on the end of the week about 1¼ points softer.

Meanwhile, the Framingham, Mass.-based office supply chain’s CDS spreads came in 146 bps this past week ended Wednesday to 1,515 bps, Moody’s said.

Plains preferreds up

Plains All American Pipeline’s 6 1/8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Ba2/BB/BB) rose nearly ¾ point to 83½ bid on $4 million of paper traded on Thursday, a source said.

The issue was moving 1 1/8 points lower on the week but had improved from Monday’s weakness.

The Houston-based natural gas and crude oil transporter’s issue fell 1 7/8 points on Monday to 82¾ bid.

CHS paper gains

CHS/Community Health Systems, Inc.’s notes improved ¾ point to 1 point in some of the more active distressed paper traded on Thursday, a source said.

The 6 7/8% senior secured notes due 2029 (Caa2/CCC/CCC) rose ¾ point to 64½ bid on $6 million of secondary activity.

The Franklin, Tenn.-based operator of acute care and outpatient facilities’ 6 1/8% senior secured notes due 2030 (Caa2/CCC/CCC) traded 1 point higher going out at 64¼ bid on $4 million of volume during the session.

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