Spirit Airlines posts strong gains; Enviva turns positive; CommScope little changed

By Cristal Cody

Tupelo, Miss., Nov. 20 – Spirit Airlines Inc.’s 8% senior secured notes due 2025 (B2) racked up the biggest gains seen in the distressed secondary market as the short holiday week opened.

The bonds climbed 4½ points on Monday on trading totaling nearly $10 million after Moody’s Investors Service downgraded the issuer.

Enviva Partners, LP’s 6½% senior notes due 2026 (Caa2/CC/CC) also gained 1½ points on Monday in lighter trading.

The bonds have declined more than 40 points over the past two weeks.

Market tone was strong with stock indices up more than ½%.

The Nasdaq closed 1.13% higher.

The iShares iBoxx High Yield Corporate Bond ETF increased 8 cents, or 0.11%, to $74.85.

The CBOE Volatility index was down 2.83% at 13.41.

CommScope Holding Co., Inc.’s notes were mixed but little changed in mostly light trading after S&P Global Ratings lowered the company’s ratings.

The 6% senior notes due 2025 (Caa2/CCC-) added ¼ point during the session, while the 8¼% senior notes due 2027 (Caa2/CCC-) fell ½ point.

Spirit notes higher

Spirit Airlines’ 8% senior secured notes due 2025 (B2) climbed 4½ points on Monday to a quote of 74¾ bid and a yield of 25.75%, a source said.

The issue was among the day’s most active distressed paper moving on $9.91 million of trading.

The bonds were quoted at the start of the month with a 74 bid handle.

Moody’s said Monday that it downgraded the company and the bonds based on expected operations losses through 2024.

Spirit Airlines, a low-cost airline based in Miramar, Fla., reported heavy third-quarter losses in October.

The company’s stock (NYSE: SAVE) closed up 6.68% to $13.26 on more than double the average volume on Monday.

Enviva improves

Enviva Partners’ 6½% senior notes due 2026 (Caa2/CC/CC) added 1½ points to head out at 45 bid and a 51.79% yield on $4 million of secondary trading on Monday, a source said.

The bonds dropped more than 10 points in the prior two sessions and gave back more than 30 points a week earlier after Enviva reported heavy third-quarter losses and doubt about its ability to continue as a going concern.

The Bethesda, Md.-based industrial wood pellets manufacturer’s stock (NYSE: EVA) rallied 17.65% on Friday and closed Monday up 1.25% to $1.62.

CommScope mixed

CommScope Technologies LLC’s 6% senior notes due 2025 (Caa2/CCC-) traded up ¼ point to 78¾ bid and a 22.9% yield on $4 million of secondary activity on Monday, a source said.

Meanwhile, CommScope, Inc.’s 8¼% senior notes due 2027 (Caa2/CCC-) fell ½ point to 46½ bid and a yield of 38.16% on $3.5 million of trading during the session.

The 7 1/8% senior notes due 2028 (Caa2/CCC-) were quoted with a 43 bid handle and yielding 30.9% on $3 million of volume on Monday.

S&P said Monday it downgraded CommScope on an elevated risk of a distressed exchange or buyback within the next 12 months.

CommScope Holding’s bonds have been volatile since the Hickory, N.C.-based network infrastructure manufacturer reported earlier in the month third-quarter losses and a 33% drop in quarterly revenue.

Distressed index

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns ended Friday soft at minus 0.08%, compared to 0.07% at the start of the prior week.

Month-to-date total returns finished the week higher at 2.1% on Friday versus 0.94% in the first session of the week.

Year-to-date distressed total returns were 12.82% at the close of the prior week, up from 11.54% at the week’s start.

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