Enviva Partners senior notes move up following downgrades; CommScope paper softens

By Cristal Cody

Tupelo, Miss., Nov. 13 – Enviva Partners, LP’s 6½% senior notes due 2026 (Caa2/CC/CC) shot up 6¼ points in distressed secondary trading on Monday after picking up more than 4 points on Friday.

The bonds shed over 30 points on Thursday after Enviva reported heavy third-quarter losses and doubt about its ability to continue as a going concern.

Enviva’s stock rallied nearly 50% on Monday after Fitch Ratings delivered more bad news to the issuer and downgraded the company and its senior notes.

Market tone opened mostly soft following Moody’s Investors Service’s decision on Friday to change the outlook on the United States to negative from stable.

The S&P 500 index declined 0.08%, while the Nasdaq Composite index closed off 0.22%.

The iShares iBoxx High Yield Corporate Bond ETF fell 7 cents, or 0.09%, to $73.99.

Volatility ramped higher.

The CBOE Volatility index climbed 4.16% to 14.76.

Market focus is expected to linger this week on a continuing heavy pace of earnings reports with more than 1,400 releases expected, including from major retailers, sources reported.

In other distressed trading on Monday, CommScope Holding Co., Inc.’s bonds saw the bulk of secondary supply following a downgrade from Moody’s, a source said.

The bonds extended declines from Friday and were seen down anywhere from around ¼ point to more than 1 point.

The 5% senior notes due 2027 (Caa2/CCC+) fell ¾ point on $12.6 million of volume.

Enviva treks higher

Enviva Partners’ 6½% senior notes due 2026 (Caa2/CC/CC) shot up 6¼ points to head out at 43 bid, a source said Monday.

The yield was 54.26%.

Trading totaled $6.43 million.

The issue was among the day’s biggest gainers in the distressed market.

Enviva’s bonds added 4¼ points on Friday to a quote of 36¾ bid and a 64.43% yield on $15.56 million of volume.

On Thursday, the issue plunged 31¾ points to hit 32½ bid and a 72.71% yield on $60.63 million of trading after Enviva reported heavy third-quarter losses, a shake-up in its leadership and that it has engaged advisers for a review of strategic alternatives.

Fitch downgraded the issuer on Monday. Moody’s and S&P Global Ratings lowered the notes last week on the likelihood the company will conduct a distressed debt exchange or default over the next six months.

The Bethesda, Md.-based industrial wood pellets manufacturer’s stock (NYSE: EVA) rallied 49.51% to $1.38 on Monday.

Shares had sunk 77.86% on Thursday and closed Friday up 8.58%.

CommScope softens

CommScope Technologies LLC’s 6% senior notes due 2025 (Caa2/CCC+) declined 1¼ points to a quote of 75½ bid and a 25.79% yield on $6.7 million of trading on Monday, a source said.

On Friday, the notes dropped 1¾ points to 76¼ bid on $20.7 million of secondary volume and fell 1 point on Thursday on $29 million of trading.

Moody’s said Monday that it downgraded the company on continued weak performance and challenges regarding its debt due in 2025 and 2026.

CommScope’s other paper also was lower on the day.

The 5% senior notes due 2027 (Caa2/CCC+) fell ¾ point to 36¼ bid on $12.6 million of volume.

The yield was 42.37%.

CommScope, Inc.’s 7 1/8% senior notes due 2028 (Caa1/CCC+) declined over ¼ point to a 42 bid handle on $11.7 million of trading on Monday.

The yield was 31.777%.

The Hickory, N.C.-based network infrastructure manufacturer reported earlier in November that it expects preliminary third-quarter losses and has adjusted its 2023 EBITDA forecast downward.

Shares (Nasdaq: COMM) declined 5.5% on Monday to $1.38.

Distressed returns better

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns closed Friday stronger at 0.34%.

Returns were at minus 0.69% on Thursday, minus 0.07% on Wednesday, 0.36% on Tuesday and minus 0.21% at the start of the prior week.

Month-to-date total returns improved to 0.86% on Friday from 0.52% on Thursday but remained down from 1.21% Wednesday, 1.28% on Tuesday and 0.92% in the Nov. 6 session.

Year-to-date distressed total returns were 11.46% on Friday, compared to 11.08% on Thursday, 11.85% on Wednesday, 11.92% on Tuesday and 11.52% at the week’s start.

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