Rite Aid paper stronger, CDS spreads gap out; Bed Bath & Beyond still moving; DISH volatile

By Cristal Cody

Tupelo, Miss., Aug. 10 – While Rite Aid Corp.’s paper moved higher this week, the drugstore chain’s credit default swaps spreads gapped out over 1,000 basis points.

Rite Aid’s credit default swaps spreads were circling around 12,000 bps.

The company’s 8% senior secured notes due 2026 (Caa3/CCC-/B) declined more than 1 point Thursday but were trading close to 5 points better on the week.

“Not much traded,” a source said Thursday.

Rite Aid’s stock slid nearly 17% over the session.

Equities stayed positive following a steady July Consumer Price Index inflation data report.

The S&P 500 index edged up 0.03% on the day.

The CBOE Volatility Index shed 0.69% to 15.85.

The iShares iBoxx High Yield Corporate Bond ETF softened 2 cents, or 0.03%, to $74.94.

The Labor Department said the Consumer Price Index rose a seasonally adjusted 0.2% in July, matching the increase seen in June and forecasts of a flat inflation rate for the month.

The index increased 3.2% over the last 12 months before the seasonal adjustment.

The core CPI rose 4.7% year over year, a drop from the 4.8% increase posted in June and the lowest annual core inflation since October 2021, according to a Confluence Investment Management note on Thursday.

Back in the secondary market, bonds from bankrupt and piecemealed Bed Bath & Beyond Inc. continued to trade this week on a 1 handle, traders reported.

Some of the company’s assets were sold in June to stalking horse bidder Overstock.com, Inc. and the company was relaunched this month as an online-only store.

Not a ton of volume in the bonds was seen, though, on Thursday.

“They’ve evaporated,” a source said. “They’re just claims options or warrants – they will trade until at some point, they’re exchanged.”

The notes were active, too, on Wednesday “but that ship has sailed,” another source said.

DISH Network Corp. stayed the blockbuster name of the day on about $198 million of secondary action.

The heavy volume followed more than $217 million of the company’s paper traded Wednesday on the heels of news the company will merge with EchoStar.

DISH’s notes were mixed on Thursday.

“They’re all over the place,” a source said.

DISH’s CDS spreads came in over 600 bps to more than 700 bps this week.

Rite Aid better on week

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) declined 1 point Thursday to 57½ bid, a source said.

The issue was last seen off 1¼ points at 57¼ bid on $2 million of trading.

The bonds were quoted Wednesday at 57 bid, 58 offered and 58 bid, 59 offered on Tuesday.

The notes were seen Monday at 58 bid.

Rite Aid’s bonds are “up on the week,” a source said.

In the same session a week ago, the 8% notes traded at 52¾ bid.

The bonds went out in the prior week around 52 bid, 53 offered.

Meanwhile, Rite Aid’s CDS spreads moved out 1,069 bps over the past week ended Wednesday to 11,802 bps, according to a Moody’s Investors Service report on Thursday.

Rite Aid’s CDS spreads eased 1,060 bps in the previous week.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) declined 16.53% on Thursday to $2.12, near the bottom of the day’s trading range.

Bed Bath ghost notes

Bed Bath & Beyond’s paper is “disappearing” but remained active in the secondary market Thursday, a source said.

The 5.165% senior notes due 2044 traded over 1/8 point better at a print of 1.21 on $2.1 million of volume.

The retailer’s 3.749% notes due 2024 were quoted at 1.2 in thin activity.

Overstock.com announced Aug. 1 that it launched the company in the United States as an e-commerce only retailer under the website bedbathandbeyond.com. Overstock’s rebranding under the Bed Bath & Beyond name merged its website with Bed Bath & Beyond. The Canada Bed Bath & Beyond site was launched June 29.

Bed Bath & Beyond received approval in June to sell its intellectual property for $21.5 million to stalking horse bidder Overstock.com from the U.S. Bankruptcy Court for the District of New Jersey.

Bed Bath & Beyond reported in July that Dream on Me Industries, Inc. will purchase its Buy Buy Baby intellectual property assets for approximately $15.5 million and the assumption of assumed liabilities.

The Union, N.J.-based home products retailer began closing its retail locations after it filed for Chapter 11 bankruptcy in April.

DISH bonds mixed

DISH DBS Corp.’s 5 1/8% senior notes due 2029 (Caa2/B-) gave back 2 points to a quote of 59 bid on Thursday, a source said.

Secondary volume topped $31 million.

The bonds on Wednesday had added 4½ points on $18.75 million of trading.

Other DISH paper was stronger in heavier secondary action Thursday.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) went out ¼ point better at 79 bid on $61.65 million of secondary supply.

The company’s bonds have been heavily traded since DISH reported Tuesday that it plans to merge with EchoStar.

The news not only pumped new life into DISH’s bonds, but also its CDS spreads.

DISH DBS’ CDS spreads firmed 721 bps to 1,542 bps over the past week ended Wednesday, while DISH Network’s CDS spreads tightened 636 bps to 1,312 bps over the same period, Moody’s said.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) closed down 1.33% at $8.16.

Distressed returns climb

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns hit 1% on Wednesday, up from 0.3% Tuesday and 0.35% on Monday.

Month-to-date total returns improved to 1.5% midweek versus 0.49% on Tuesday and 0.2% on Monday.

Year-to-date distressed total returns were 16.66% on Wednesday, up from 15.5% on Tuesday and 15.16% at the start of the week.

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