Junk secondary posts strong weekly gains; CCC credits eyed; AMC gains; Avaya losses mount

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 12 – An increased risk appetite is expected to bring new junk bonds deals in the week ahead, sources said.

Looking at the week just wrapped, the junk bond secondary space posted another week of strong gains with the ICE BofAML US High Yield index returns narrowing to a negative 7% handle and credit spreads the tightest in more than two months.

Several badly battered credits made significant improvement over the past week as investors begin to eye the lower credit tiers for their upside potential.

Condor Merger Sub, Inc.’s (McAfee Corp.) 7 3/8% senior notes due 2030 (Caa2/CCC+) and PMHC II, Inc.’s (Prince International Corp.) 9% senior notes due 2030 (Caa2/CCC+), one of the worst performing issues of 2022, gained more than 2 points over the course of the week.

AMC Entertainment Holdings Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) added to their strong gains on Friday with the notes up another 1½ points in active trading.

While credit markets have improved substantially over the past two weeks, the rally has been on thin volume, sources said.

Losses continued to mount, though, for Avaya Holdings Corp.’s 6 1/8% senior secured notes due 2028 (Caa2/CCC-) with the company’s credit ratings slashed following its going concern warning earlier in the week.

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