Rite Aid notes edge up; Home Point improves; 99 Cents, Transocean paper declines

By Cristal Cody

Tupelo, Miss., April 11 – Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC/BB-) improved over ¼ point on Monday after ending Friday about 6 points lower on the week following an analyst report.

The company’s fourth-quarter earnings release coming up in the short market session on Thursday is widely in focus in the distressed space.

In other distressed secondary action on Monday, Home Point Capital Inc.’s 5% senior notes due 2026 (B3//B-) rose ¼ point.

99 Cents Only Stores LLC’s 7½% senior secured notes due 2026 (Caa2/B-) dropped 2½ points during the session.

Tone was risk-off with stocks lower on the day as market volatility shot up over 15%, while May and June oil prices also retreated.

The Chicago Board Options Exchange’s CBOE Volatility index went out 15.17% higher at 24.37.

The iShares iBoxx High Yield Corporate Bond ETF dropped 55 cents to end at $79.69.

West Texas Intermediate crude oil benchmark futures for May delivery settled down $3.97 to $94.29 a barrel.

Bonds in the energy space were softer, a source said.

Offshore driller Transocean Inc.’s 11½% senior guaranteed notes due 2027 (Caa3/CCC+) dropped over 2¼ points to near the 101 bid area and yielding over 11% on $3 million of paper traded on Monday.

Looking at China’s distressed property developer space, Zhenro Properties Group Ltd.’s offshore bonds were quiet after the company defaulted on two dollar-denominated bonds.

Rite Aid edges up

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC/BB-) traded over ¼ point better at a print of 87.31 on $6 million of secondary action on Monday, a source said.

The notes were down about 6 points in the previous week after a Deutsche Bank analyst report slashed the company’s stock price target to $1.

Rite Aid’s stock closed off 5 cents at $7.46 on Monday.

The company will release its fourth-quarter earnings results before the bond markets open in the short session on Thursday ahead of the Good Friday holiday.

The Camp Hill, Pa.-based drugstore company’s credit default spreads were 363 basis points wider at 1,716 bps for the past week ended Wednesday.

Home Point trades

Home Point Capital’s 5% senior notes due 2026 (B3//B-) traded ¼ point higher on Monday, heading out at 79¾ bid with $3 million of volume seen, a market source said.

The Ann Arbor, Mich.-based company is the parent of Homepoint, the nation’s third-largest wholesale mortgage lender.

99 Cents lower

Meanwhile, paper from 99 Cents Only Stores was under pressure over the day, a market source noted.

99 Escrow Issuer Inc.’s 7½% senior secured notes due 2026 (Caa2/B-) declined 2½ points to a quote of 64¾ bid.

Trading volume in the issued totaled $4 million.

The Commerce, Calif.-based discount retailer’s bonds are down about 5 points since the start of April.

Zhenro paper quiets

In China’s distressed property space, Zhenro’s 8.35% senior notes due 2024 (//C) were last seen in the secondary market on Friday with the issue about ¾ point higher at 16¾ bid, a source said.

Zhenro defaulted after failing to make $20.42 million of interest payments on two dollar-denominated bonds before the 30-day grace period expired on Saturday, according to a regulatory filing.

The company also has $32.58 million of interest payments due on three additional dollar bonds with the grace periods expiring between Sunday and May 14.

Zhenro said in the filing it intends to pay the interest due on all five notes by May 31.

The Shanghai-based real estate development company also reported that it may default on $23.36 million of principal due Wednesday on its April 2021 notes.

Index results

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return improved on Friday to minus 0.01%, compared to minus 0.02% on Thursday, minus 0.58% on Wednesday, minus 0.10% on Tuesday and 0.41% at the start of the week.

Month-to-date total returns rose to minus 0.06% versus minus 0.29% on Thursday, minus 0.27% on Wednesday, 0.31% on Tuesday and 0.41% at the week’s start.

Year-to-date index returns softened to minus 5.95% on Friday from minus 5.59% on Thursday, minus 5.57% on Wednesday, minus 5.02% on Tuesday and minus 4.93% in the April 4 session.

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