Rite Aid, Staples, Kohl’s paper, CDS spreads under pressure; Avaya notes climb higher

By Cristal Cody

Tupelo, Miss., Aug. 25 – Rite Aid Corp.’s, Staples, Inc.’s and Kohl’s Corp.’s notes and credit default swaps spreads stayed under pressure over the week.

Rite Aid’s CDS spreads widened nearly 400 basis points.

The drugstore retailer’s 8% senior secured notes due 2026 (B3/CCC-/BB-) dropped about ½ point on Thursday.

Kohl’s 5.55% senior notes due 2045 (Baa2/BBB-) stayed mostly unchanged over the session in light trading but were down about 2 points on the week.

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) rose about 1 point on Thursday and were down about ½ point this week.

The session ended with stock indices higher across the board and market volatility on the decline. The Nasdaq was up 1.67%.

The iShares iBoxx High Yield Corporate Bond ETF jumped 70 cents, or 0.92%, to $77.06.

The CBOE Volatility index gave back 3.9% to head out at 21.93.

Overall distressed secondary supply remained light on Thursday.

Avaya Inc.’s 6 1/8% senior secured notes due 2028 (Caa2/CCC-/CCC) were among the most active distressed names seen trading on $13 million of volume, a source said.

The notes have climbed about 17¼ points this week.

Bausch Health Cos. Inc.’s notes remained soft over the day after dropping about 1¼ points to more than 6 points on Wednesday.

Bausch Health’s paper traded about ¾ point to 2½ points weaker on Thursday.

Rite Aid declines

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) were down about ½ point at 83¼ bid in mostly light secondary activity on Thursday, a source said.

The notes have dropped about 3¾ points this week.

Meanwhile, the Camp Hill, Pa.-based drug retailer’s CDS spreads widened 399 bps to 1,850 bps over the past week ended Wednesday, according to a Moody’s Investors Service report.

Kohl’s softens

Kohl’s 5.55% senior notes due 2045 (Baa2/BBB-) stayed mostly unchanged with a 73 handle in thin secondary action during the session and were down about 2 points since last week, a source said.

The notes traded with a 114 handle at the start of the year.

Kohl’s CDS spreads also eased 75 bps to 458 bps in the past week ended Wednesday, according to a Moody’s report.

The Menomonee Falls, Wis.-based department store chain announced in July that it called off a plan to put the company up for sale.

Staples notes up

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) rose about 1 point to the 78 bid area in thin trading action over the session, a source said.

The notes were down about ½ point this week.

In addition, the Framingham, Mass.-based office supply chain’s CDS spreads eased 210 bps over the past week ended Wednesday to 1,729 bps, a Moody’s report said.

Avaya trades higher

In stronger trading activity, Avaya’s 6 1/8% senior secured notes due 2028 (Caa2/CCC-/CCC) were quoted Thursday at 57 bid on $13 million of paper traded, a source said.

The notes have jumped about 17¼ points this week.

Avaya’s paper was under pressure earlier in the month following the company’s report of additional weak preliminary third-quarter results and credit ratings downgrades.

The Durham, N.C.-based technology company also reported internal investigations by its audit committee.

Bausch trades lower

Bausch Health’s paper traded about ¾ point to 2½ points weaker on Thursday in light secondary activity after declining about 1¼ points to more than 6 points on Wednesday, a source said.

The company’s 9% senior notes due 2025 (Caa2/CCC/B-) traded off 2½ points to 63½ bid on $1 million of volume.

Bausch’s notes had dropped more than 6¾ points in the previous session on $10 million of trading.

The company’s 5% senior notes due 2028 (Caa2/CCC/B) declined 1½ points to head out at 44½ bid on $1 million of volume Thursday.

The issue traded Wednesday down 1¼ points on $3 million of supply.

The Laval, Quebec-based pharmaceutical company on Monday reported progress on its plan to separate Bausch + Lomb, including that it retained legal and financial advisers to evaluate strategic alternatives.

Distressed index improves

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved Wednesday to minus 0.01% from minus 0.45% on Tuesday and minus 0.93% on Monday.

Month-to-date total returns softened to 1.69%, compared to 1.7% on Tuesday and 2.16% at the week’s start.

Year-to-date total returns edged wider to minus 19.33% from minus 19.32% on Tuesday and minus 18.96% on Monday.

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