September 13th 2020
Currently tracking 209 credits from 120 companies.
If you wish to view the Distressed Watchlist within Google Sheets, please request access to it and I will shortly grant you access to it.
Leaders for the Week
Laggards for the Week
GTT Communications (GTT 7.875 '24) were active as reports surfaced that it is in advanced talks to sell its European fiber assets for over $2B. The bonds ended the week higher by 14pts to 51.00 yielding 28.6%.
Staples (SPLS) reported better than expected earnings sending its bonds higher. SPLS 10.75 '27 traded up 10.50pts to 83.50 yielding 14.8% while the SPLS 7.50 '26 traded up 4.75pts to 94.75 yielding 8.7%.
GameStop (GME 6.75 '21) traded up 6pts to 98.50 yielding 10.1%.
JC Penny (JCP 5.875 '23) traded down 7pts to 32.00 as mall owners Simon (SPG) and Brookfield (BPY) finalize a deal to purchase JCP's operations out of bankruptcy.
Energy credits were weaker last week with QEP Resource (QEP 5.25 '23) down 5pts to 79, Laredo Petroleum (LPI 10.125 '28) down 4pts to 67, and Antero Resources (AR 5.00 '24).
Peabody Energy (BTU 6.00 '22) moved higher by 4.5pts to 55.50.
Golden Nugget (LNY 8.75 '25) traded up 9pts to 85.00 yielding 12.9%. The bonds have rallied 35pts since the start of August.
Recapping past featured credits
It has been 18 weeks since I began writing the weekly Distressed Digest. My primary focus each week is remain somewhat in touch with the general distressed market. Recording my thoughts on this blog has been helpful for me and hopefully given some insight for others.
When I write a feature post, I try to remain unbiased as possible since it is my intent to make observations not recommendations. This week feels like a good time to stop and reflect on how some of these distressed situations have panned out.
May 4, 2020
Since May, cruise stocks and credits have rallied so much they only Viking Cruises remains on the distressed watchlist. The best performing credit out of the group was Royal Caribbean Cruises (RCL) with 30% gains.
May 11, 2020
My quick airline credit review back in May seemed to be the bottom for airliners. American Airlines (AAL) and United Airlines (UAL) were the hardest hit credits in March/April but reversed course since.
May 24, 2020
One of the best performing credit for the past few months has been Hertz (HTZ). Since filing for bankruptcy, the unsecured credits traded nearly 300% higher.
May 31, 2020
Another great performing credit has been Party City (PRTY). Since filing to exchange their unsecured notes, the remaining non-exchanged unsecured bonds have been higher by 300%+. The holders who participated in the exchange have done well as the new notes is trading in the low 60s and the stock is now trading 150% higher at $2.58.
June 14, 2020
AMC Entertainment (AMC) saw its capital structure first move lower as the subordinated exchange was reworked. The capital structure struggled in the beginning of the summer losses but recoup those losses by Labor Day. The whole capital structure remained relatively unchanged since.
June 21, 2020
After skipping its interest payment, Briggs & Stratton (BGG) entered bankruptcy with the intent to sell all its operations. They started the process with a stalking horse bid of $550M from KPS Capital Partners. It quickly ended this past week as no alternative buyer emerged, leaving the unsecured notes to negotiate with KPS for a very small, if any, recovery.
July 12, 2020
Chesapeake Energy (CHK) entered bankruptcy with reorganization plan in place. So far it has been too early to tell how CHK lenders will fare. Later this year, will be a good time to revisit this situation.
July 26, 2020
Cooper-Standard (CPS) has been quiet over the past month and half. The unsecured notes only recently traded higher 8-9pts to the low 60s while the secured notes have been moved up 2.25pts to 107.25 from 105.00.
It is always good to a step back and review past observations. The high-yield distressed market has been very strong and active the past few months. It has attributed to some excellent gains for many of the previously mentioned credits (without Briggs & Stratton of course). As the fourth quarter is approaching quickly, it will be interesting to see how the remainder of the year plays out for the distressed market.