Carvana paper bounces back, stock jumps; Party City declines; Rite Aid notes soften

By Cristal Cody

Tupelo, Miss., Dec. 8 – Carvana Co.’s notes recovered nearly ½ point to 3 5/8 points in busy trading action on Thursday after softening as much as 3 points in the prior session, while its stock also bounced back by nearly 30%.

Carvana's 5 5/8% notes due 2025 (Caa2/CCC) climbed 3 5/8 points on nearly $11 million of volume on Thursday.

The bonds were seen 3 points weaker on Wednesday on $9 million of secondary supply.

Carvana’s stock also rallied 29½% by the close after sinking more than 40% on Wednesday following growing restructuring chatter and after its stock price outlook was cut to $1 by an analyst.

Market tone perked up on Thursday with stock indices all up and volatility lower. The Nasdaq closed 1.13% higher.

The iShares iBoxx High Yield Corporate Bond ETF rose 6 cents, or 0.08%, to $75.04.

The CBOE Volatility index fell 1.72% to $22.29 over the afternoon.

Meanwhile, Party City Holdings Inc.’s 8¾% senior secured notes due 2026 (Caa1/CCC+) slid further into distressed trading with the bonds down 6½ points on Thursday.

Rite Aid Corp. was heading toward the weekend softer with its bonds lower and its credit default swap spreads just south of 500 basis points wider on the week, sources said Thursday.

Rite Aid’s 7.7% senior bonds due 2027 (Caa2/CCC-/CCC) fell about 2 points on Thursday on $1.5 million of trading.

Carvana bonds up

Carvana’s notes traded Thursday nearly ½ point to 3 5/8 points higher after softening as much as 3 points in the prior session, sources said.

Carvana’s 10¼% senior notes due 2030 (Caa2/CCC) rose less than ½ point to a print of 42.33 on $11.7 million of secondary action.

The issue was seen Wednesday down about ¼ point to 1 point in trading on more than $30 million of volume.

Carvana sold $3.28 billion of the notes at par on April 27, 2022.

Carvana's 5 5/8% notes due 2025 (Caa2/CCC) rallied 3 5/8 points to 46 bid on $10.97 million of trading on Thursday.

The bonds were seen Wednesday 3 points weaker on $9 million of volume.

Carvana’s 4 7/8% senior notes due 2029 (Caa2/CCC) also climbed 3¼ points by the close on $6 million of supply on Thursday. The issue was quoted at 37 bid.

The notes were down 3/8 point on $26.5 million of volume on Wednesday.

Carvana's target stock price was cut to $1 on Wednesday by Wedbush Securities analyst Seth Basham on growing chances of a restructuring following news reports that a majority group of creditors signed an agreement to cooperate in restructuring negotiations.

Carvana's stock plunged 42.92% on Wednesday.

The Phoenix-based online car retailer’s stock closed Thursday up 29.5% to $4.96.

Party City moves lower

Party City’s 8¾% senior secured notes due 2026 (Caa1/CCC+) slid 6½ points to head out at 30½ bid in strong trading action on Thursday, a source said.

Secondary volume totaled more than $13.6 million.

The bonds sank in November after parent Party City Holdco Inc. reported weak third-quarter results and full-year guidance that was curbed by soft Halloween sales.

Party City is reportedly in discussions with creditors.

The Woodcliff, N.J.-based retailer’s stock was trading at 59 cents, down 0.15%, on Thursday.

Rite Aid weakens

Rite Aid’s paper and its CDS spreads remained mostly soft, according to market sources on Thursday.

The company’s 7.7% senior bonds due 2027 (Caa2/CCC-/CCC) fell about 2 points to around 48½ bid on $1.5 million of trading.

Rite Aid’s CDS spreads also widened 463 bps for the past week ended Wednesday to 3,622 bps, according to a Moody’s Investors Service report.

Rite Aid completed a cash tender offer on Wednesday for up to $200 million of its 7½% senior secured notes due 2025 (B3/CCC-/CCC).

The Camp Hill, Pa.-based drug retailer will post results for the fiscal 2023 third quarter ended Nov. 26 on Dec. 21.

Distressed returns soft

S&P U.S. High Yield Corporate Distressed Bond index one-day returns remained soft on Wednesday but improved to minus 0.38% from minus 0.56% on Tuesday. One-day returns were 0.27% on Monday.

Month-to-date total returns were 0.22% on Wednesday, compared to 0.6% on Tuesday and 1.16% on Monday.

Year-to-date total returns declined to minus 25.28% on Wednesday from minus 25% on Tuesday and minus 24.58% at the start of the week.

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