Endo notes positive as company begins debt refinancing; PHI issues dip over maturity fears

By James McCandless

San Antonio, March 14 – The Thursday session in the distressed space saw focus shift to news-making names.

Endo International plc’s notes were positive as the company kicked off a debt refinancing effort centered on a new offering of senior secured notes.

Sector peer Teva Pharmaceutical Industries Ltd.’s issues were similarly active but level.

In the energy space, PHI, Inc.’s paper dipped amid mounting concern that it would default after a $500 million maturity on Friday.

Mixed oil futures were the backdrop for improvements in Ensco plc’s and EP Energy Corp.’s notes while Halcon Resources Corp.’s saw another large drop.

Elsewhere, PG&E Corp.’s notes gained despite its bankruptcy court judge expressing concerns about more potential wildfires in 2019.

In retail, PetSmart, Inc.’s issues were rising while L Brands, Inc.’s paper closed mixed.

Endo positive, Teva level

Endo’s notes were positive in the Thursday session, traders said.

The 5 3/8% notes due 2023 added 4 points to close at 83¾ bid. The 6% notes due 2025, while pushing slightly higher to 75¼ bid during the day, ended level at 75 bid, according to Trace data.

The Dublin-based pharmaceutical name saw heightened trading after announcing debt refinancing transactions early Thursday.

The central part of the plan is a $1.5 billion issue of eight-year senior secured notes, which was upsized from $1 billion and yields 7½%, Prospect News reported.

Subsidiary Par Pharmaceutical Cos., Inc. brought the notes to market on Thursday.

The proceeds will be used to fund tender offers by Endo Finance LLC, another subsidiary, and other debt reducing measures.

Moody’s Investors Service and S&P Global Ratings issued downgrades on Thursday to reflect the new structure.

“Endo’s going to be topical for a while,” a trader said.

Meanwhile, Petach Tikva, Isreal-based sector peer Teva’s issues were similarly active but ended level.

The 3.15% notes due 2026, hitting as high as 84 bid, came back down to close level at 81¾ bid.

PHI dips

Elsewhere, in the energy space, PHI’s paper took a dip, market sources said.

The 5¼% paper due 2019 dropped 4½ points to close at 60 bid.

Concerns were mounting on Thursday that the Lafayette, La.-based offshore transportation company would not be able to meet its obligations on the $500 million of the 5¼% paper maturing on Friday.

After announcing that it would be conferring with creditors in February, the company has not provided updates on financing.

“If they had something they would’ve said so by now,” a trader said. “It’s highly likely that they default tomorrow.”

On Thursday, Fitch downgraded the company’s issuer default rating and senior unsecured debt ratings.

Oil mixed

As crude oil futures closed mixed, distressed oil names trended upward, traders said.

London-based contract driller Ensco’s notes were better.

The 7¾% notes due 2026 picked up ¾ point to close at 85¾ bid. The 7.2% notes due 2027 added 1 point to close at 81 bid.

Houston-based independent oil and gas producer EP Energy’s issues were also gaining.

The 7¾% notes due 2026 traded up 1¼ points to close at 87¼ bid.

Halcon, another Houston-based producer, saw a steep fall.

The 6¾% paper due 2025 shed 8¼ points to close at 51¾ bid.

On Wednesday, the 6¾% paper sunk 13½ points.

Late Tuesday, in its fourth-quarter earnings statement, the company reported a 9 cent per share loss, narrowly beating analyst predictions of a 10 cents per share loss.

West Texas Intermediate crude oil futures for April delivery finished the Thursday session up 35 cents to $58.61 per barrel.

On the other side of the spectrum, North Sea Brent crude oil futures for May delivery closed at $67.23 per barrel after losing 32 cents.

PG&E up

In the utilities sector, PG&E’s notes were better, market sources said.

The 6.05% notes due 2034 rose 2 points to close at 94½ bid.

Late Wednesday, news broke that the judge overseeing the San Francisco-based electric utility’s bankruptcy case is concerned that another potential wildfire could lead to a default on its proposed $5.5 billion loan.

“It’s been interesting to see the structure move up like it has despite all the wrenches that have been thrown into the works,” a trader said.

PetSmart rises, L Brands mixed

PetSmart’s issues were on the rise on Thursday, traders said.

The 5 7/8% notes due 2025 gained 1 point to close at 82¼ bid. The 8 7/8% notes due 2025 added 1¾ points to close at 70¼ bid.

The Phoenix-based pet supplies retailer saw increased activity amid a tumultuous retail sector.

“They’ve been on the backburner for a while,” a trader said. “There hasn’t been anything new from them.”

Columbus, Ohio-based sector peer L Brands’ paper was mixed.

The 6¾% paper due 2036 shaved off ¼ point to close at 84 bid. The 5¼% paper due 2028 closed level at 87 bid.

© 2015 Prospect News.
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