Michaels flat on heavy volume; Cooper-Standard softens; Lukoil declines; Evergrande up

By Cristal Cody

Tupelo, Miss., March 23 – Michaels Cos., Inc.’s notes saw heavy trading action in the distressed secondary market on Wednesday, while distressed emerging markets issues from China, Russia and Ukraine issuers remained active.

Michaels’ 7 7/8% senior notes due 2029 (B3/CCC+) were flat on the day on more than $37 million of paper traded.

Cooper-Standard Automotive Inc.’s 5 5/8% senior notes due 2026 (Caa2/CCC) shed over 2 points to trade with a handle now in the mid-50s.

The notes have slid nearly 20 points from a month ago.

Financial markets were mixed over the session as stock indices fell over 1%.

The iShares iBoxx High Yield Corporate Bond ETF closed down 26 cents to $81.74.

May oil prices rallied over $5 to $6 on Wednesday.

West Texas Intermediate crude oil benchmark futures for May delivery settled up $5.66 to $114.93 a barrel.

Dollar bonds in the Russia and Ukraine sectors have remained active but mostly softer this week as Russia’s invasion of the country continues, sources said.

Moscow-based PJSC Sberbank’s 5 1/8% notes due Oct. 29, 2022 recovered over 1¾ points to trade around 15¼ bid and yielding over 784%. The issue saw $4 million of secondary supply on Wednesday.

Paper from Moscow-based energy company PJSC Lukoil Oil Co. (Caa2/CCC-/CC) was seen about 1¼ points to 4 points weaker during the session.

Lukoil’s 4.563% notes due 2023 dropped 4 points to 59½ bid on $2 million of volume.

Kernel Holding SA’s 6½% senior notes due 2024 (B-/CCC) stayed on the sidelines after the Ukrainian agricultural commodities company’s issue saw a print of 42.40 in one trade on Tuesday, down over 6 points from Friday.

Meanwhile, China’s distressed property issues were trading higher over the day.

China Evergrande Group’s 8¾% senior notes due 2025 (C//C) added nearly 1 point in Wednesday’s session, with the paper going out almost 2 points better week to date.

Shanghai- and Hong Kong-based real estate development company CIFI Holdings (Group) Co. Ltd.’s 6.45% senior notes due 2024 (BB-/BB) were nearly 2¾ points higher on Wednesday at 72¾ bid, a source said. Trading was light with over $1.75 million of volume.

Michaels unchanged

Michaels’ 7 7/8% senior notes due 2029 (B3/CCC+) went out unchanged at 83 bid in heavy trading action totaling more than $37.8 million on Wednesday, a market source said.

The Irving, Tex.-based craft retailer’s notes are yielding over 11.43%.

Cooper-Standard softens

Cooper-Standard’s 5 5/8% senior notes due 2026 (Caa2/CCC-) were quoted trading by the end of the day at 55.438, down more than 2 points from Tuesday, a source said.

Volume was light with $1 million of supply.

The issue has declined from the 74½ bid range in February.

The Northville, Mich.-based supplier of sealing and fluid handling systems and components reported weak fourth-quarter earnings in February.

Evergrande improves

China Evergrande’s 8¾% senior notes due 2025 (C//C) picked up nearly 1 point in Wednesday’s session to head out at 13 7/8 bid, with the paper quoted trading nearly 2 points higher so far this week, a source said.

The issue rose ¼ point on Tuesday and improved ¾ point on Monday.

Evergrande reported in filings released Tuesday that it will not complete audit procedures in time to post its audited 2021 earnings on or before March 31.

Trading in the company’s stock and structured products listed on the Hong Kong Stock Exchange was halted on Monday and will remain suspended until the results are posted, Evergrande said.

The Shenzhen, China-based real estate developer also reported its principal subsidiary Evergrande Property Services Group Ltd. will investigate how RMB 13.4 billion of its deposits were used as security for third-party pledge guarantees.

Distressed index up

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return rose to 0.46% on Tuesday from 0.08% on Monday.

Month-to-date total returns also were improved on Tuesday at minus 2.59% versus minus 3.04% on Monday.

Year-to-date index returns tightened to minus 5.85% from minus 6.29% at the start of the week.

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