Community Health stronger; Endo, Bausch paper improves; higher default rates forecast

By Cristal Cody

Tupelo, Miss., July 22 – The lift in junk hospital names early Friday on better-than-expected earnings reports extended to the distressed space over the session.

Community Health Systems Inc.’s senior secured notes traded about 2 points to more than 5 points higher on Friday ahead of its second-quarter earnings release next week.

CHS/Community Health Systems, Inc.’s 6 7/8% senior secured notes due 2029 (Caa2/CCC) were quoted at 64 7/8 bid, up 5 1/8 points from Thursday, a source said.

Volume was steady on $4 million of paper traded.

The gain in health care names also extended to the pharmaceuticals space.

Endo International plc’s paper was mostly higher in light trading with the 6 1/8% senior secured first-lien notes due 2029 (Caa2/CC) up 1½ points at 80½ bid, a source said.

Bausch Health Cos. Inc.’s 5¼% senior notes due 2031 rose 1¼ points in light trading to 53¼ bid, about 7¾ points higher this week, a source said.

Meanwhile, default rates are set to rise across the U.S. and European high-yield and institutional leveraged loan markets in 2023 and 2024, according to a Fitch Ratings report.

Fitch forecasts junk default rates at 1¼% to 1¾% in 2023, up from a 1% forecast rate for 2022.

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