Pharmaceutical bonds gain; Hertz, Peabody Energy notes soften; AMC Entertainment rises

By Cristal Cody

Tupelo, Miss., Feb. 10 – Pharmaceutical bonds traded better in the distressed secondary market on Wednesday.

Pharmaceutical manufacturer Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) continued to see heavy trading during the session with the notes heading out better at 88 1/8 bid from 88 bid on Tuesday and 87½ bid on Monday, a source said.

Pharmaceuticals maker Mallinckrodt plc’s 5½% notes due 2025 climbed to 50 bid in strong secondary volume on Wednesday, according to a market source. The notes were last seen trading Friday at 47½ bid.

The company filed for Chapter 11 bankruptcy in October.

In a motion filed earlier in February with the U.S. Bankruptcy Court for the District of Delaware, Mallinckrodt said it has reached an agreement with restructuring support agreement parties to pursue a plan of reorganization.

In other distressed secondary trading, car rental company Hertz Corp.’s 5½% notes due 2024 softened about ½ point to 68½ bid over the session but remain better than where the notes traded with a 64 handle last week, a source reported.

Hertz filed for Chapter 11 bankruptcy in May.

In January, Hertz received bankruptcy court approval to dispose of at least 121,510 lease vehicles in a master lease agreement in exchange for paying noteholders $756 million in nine equal payments of $84 million.

Meanwhile, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) improved ¾ point to 61¾ bid late Wednesday afternoon, a source noted. The issue softened 3 5/8 points in the previous day and traded down 7/8 point on Monday.

AMC’s distressed bonds have been volatile in heavy trading since rallying in late January after the company announced additional funding was secured.

Markets mixed

Market tone remained mixed on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF softened 2 cents, or 0.02%, to $87.60.

Oil futures continued to trend higher.

North Sea Brent crude oil futures for April deliveries rose 38 cents to settle at $61.47 a barrel.

West Texas intermediate crude oil for March deliveries climbed 32 cents to $58.57 a barrel over the day.

In the energy space, offshore driller Transocean Inc.’s paper traded about 1 point to 1½ points better in heavy secondary supply on Wednesday, a source said.

The company’s 8% senior notes due 2027 (Ca/CCC) jumped 1½ points to 58¼ bid by the close.

Gran Tierra Energy Inc.’s 7¾% senior notes due 2027 (B-/CCC) added another 1 5/8 points to trade at 80 3/8 bid on Wednesday, a source said.

The notes were last quoted on Friday up 3 points at 75½ bid.

Coal producer Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/CCC-) declined in heavy secondary supply over the day, a source said. The notes softened about 1 point to 54¼ bid.

Peabody Energy completed a distressed exchange for its 6% secured notes due 2022 in January for new 10% secured notes due 2024 and 8½% secured notes due 2024.

Elsewhere, Global Aircraft Leasing Co.’s 7½% notes due 2024 (B1) have climbed higher in heavy secondary volume over the past three sessions, a source said. The notes traded Wednesday at 90¾ bid, up from 89½ bid on Tuesday and 88 bid on Monday.

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