Endo notes gain; Community Health softens; Toledo Hospital improves; Bausch declines

By Cristal Cody

Tupelo, Miss., Aug. 29 – Bankrupt Endo International plc’s paper ticked higher on Monday as the company reported new developments, including that its stock was delisted from the Nasdaq on Friday.

Endo also gave notice in an 8-K filing with the Securities and Exchange Commission that it plans a Sept. 29 general meeting “to consider whether any, and if so what, measures should be taken to deal with the situation which has arisen whereby the company’s net assets are less than half of the company’s called-up share capital.”

Community Health Systems Inc.’s 6 1/8% senior secured notes due 2030 (Caa2/CCC) fell about ½ point in thin trading over the day.

Distressed trading activity remained light on Monday in the run-up to the Labor Day holiday.

Stocks continued to give back after sliding Friday following comments from Federal Reserve chairman Jerome Powell at the annual Jackson Hole economic symposium.

The Nasdaq was down 1.02% after ending Friday off 3.94%.

The iShares iBoxx High Yield Corporate Bond ETF fell 29 cents, or 0.38%, to $75.52 at Monday’s close following a 1.65% drop ahead of the weekend.

The CBOE Volatility index, which rose 17.36% on Friday, inched up 2.43% on Monday to 26.18.

In other distressed health care paper, Toledo Hospital’s notes have been under pressure in August but saw some relief on Monday.

Toledo Hospital’s 5.325% senior secured notes due 2028 (Baa3/BB), down more than 30 points from July, rose about 1½ points in active trading.

Meanwhile, Bausch Health Cos. Inc.’s notes declined about ¼ point to 3¼ points on Monday after trading about 8¾ points to more than 10 points lower last week.

The health care space remains soft with a Chapter 11 bankruptcy announcement from Carestream Health Inc. earlier in August.

Downgrades outpaced upgrades last week, with the “possibility of debt restructurings looming for some issuers as higher costs, supply chain constraints, and slowing growth chip away at credit quality,” S&P Global Ratings said in a report on Monday.

“Credit pricing continues to soften, with U.S. and European investment-grade and speculative-grade spreads above their five-year averages,” according to the note.

Endo trades up

Endo Luxembourg Finance Co. Sarl’s 6 1/8% senior secured first-lien notes due 2029 (Caa2/CC) went out at 87 bid, up 1½ points from Friday, a source said.

Endo Finance LLC’s 9½% bonds due 2027 (Caa2/D) were at 27 bid in thin trading, ¼ point better from Friday.

Endo filed for Chapter 11 bankruptcy on Aug. 16.

The company reported in the SEC filing Monday that it will hold a general meeting on Sept. 29 to consider any measures regarding the situation in which the company’s net assets are less than half of the company’s called-up share capital.

The Dublin-based pharmaceuticals company entered into a restructuring agreement with stalking horse bidder Ad Hoc First Lien Group, which is made up of certain creditors holding more than 50% of its outstanding secured debt.

CHS gains in August

CHS/Community Health Systems, Inc.’s 6 1/8% senior secured notes due 2030 (Caa2/CCC) softened about ½ point in thin trading on Monday, a source said.

The notes were quoted at 60½ bid, recovered from a low of 48 bid in late July and about 6 points better since the start of August.

The Franklin, Tenn.-based operator of acute care and outpatient facilities’ 6 7/8% senior notes due 2029 (Caa2/CCC) also dropped about 1¾ points to a 61 handle in very light trading on Monday.

The notes were about 10 points better since late July and about 5 points higher since the start of the month.

Toledo Hospital better

Toledo Hospital’s 5.325% senior secured notes due 2028 (Baa3/BB) picked up about 1½ points in active trading over the day to head out at 65 bid but remained well below where the issue started the month, a source said.

The notes finished July in the 97 bid range.

Notes from the Ohio-based health care company, doing business as ProMedica Health System, Inc., were dropped to junk by S&P on Aug. 9.

Bausch notes soften

Bausch Health’s paper traded down about ¼ point to 3¼ points in mostly light secondary supply on Monday, a source reported.

Bausch’s 9% senior notes due 2025 (Caa2/CCC/B-) fell 3¼ points to 60¼ bid by the close on $1 million of volume.

The company’s 5% senior notes due 2028 (Caa2/CCC/B-) were down ¼ point at 40¾ bid after ending the prior week down about 8¾ points.

Bausch’s 7% senior notes due 2028 (Caa2/CCC/B-) headed out 1¼ points weaker at 43¾ bid.

The notes finished the previous week nearly 10 points lower.

The Laval, Quebec-based pharmaceutical company announced an update a week ago on its plan to separate Bausch + Lomb, including that it retained legal and financial advisers to evaluate strategic alternatives.

Distressed index soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened on Friday to minus 0.33% from 0.12% on Thursday, minus 0.01% on Wednesday, minus 0.45% on Tuesday and minus 0.93% at the week’s start.

Month-to-date total returns fell to 1.47% from 1.8% on Thursday, 1.69% on Wednesday, 1.7% on Tuesday and 2.16% in the week’s first session.

Year-to-date total returns dropped to minus 19.5% on Friday from 19.24% on Thursday, minus 19.33% on Wednesday, minus 19.32% on Tuesday and minus 18.96% in the Aug. 22 session.

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