Mallinckrodt notes decline; Endo paper softens; Moss Creek sees gains; Frontier eyed

By Cristal Cody

Tupelo, Miss., April 20 – Bankrupt pharmaceuticals maker Mallinckrodt plc’s bonds softened in distressed secondary trading on Tuesday after the company filed a Chapter 11 bankruptcy plan.

Mallinckrodt’s 4¾% notes due 2023 declined 3 points to the 20 bid area, a market source said.

A week ago, the notes traded at 25 bid.

The company’s 5 5/8% notes due 2023 fell ¾ point to 73½ bid during the session. The notes traded in the prior week at 75¼ bid.

Mallinckrodt filed for Chapter 11 bankruptcy on Oct. 12, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

On Tuesday, the company, which has principal offices in Dublin and St. Louis, filed a Chapter 11 plan of reorganization and disclosure statement with the court.

A hearing on the plan is scheduled for May 26.

Mallinckrodt announced in March that it reached an agreement with a group of first-lien term lenders holding about $1.3 billion of its outstanding first-lien term loans to support its restructuring support agreement.

Endo notes decline

Elsewhere in the distressed pharmaceuticals sector, Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) traded late Tuesday nearly 2 points lower at 68¼ bid in strong secondary volume, a market source said.

The notes traded in the same session last week at 75 bid.

In early January, the issue was quoted at 84 bid.

Parent Dublin-based pharmaceuticals maker Endo International plc will report its first-quarter earnings results on May 6.

Frontier active

Meanwhile, Frontier Communications Corp.’s bonds continued to trade heavily on Tuesday after being among the most actively traded bonds on Monday, a source said.

Frontier’s 11% senior notes due 2025 headed out unchanged from Monday at 71 bid but up about 2 points from the same session a week ago.

The company’s 9% senior notes due 2031 rose ¼ point to 66¾ bid on Tuesday. The notes are up about 1¾ points from the same day last week.

The Norwalk, Conn.-based telecommunications company reported Tuesday a $15.29 million earnings loss on $560.16 million of revenue for March.

Frontier filed for Chapter 11 on April 14, 2020 in the U.S. Bankruptcy Court for the Southern District of New York.

The company reported on Thursday that it expects to emerge from Chapter 11 bankruptcy soon.

Under the restructuring announced in April with unsecured bondholders representing more than 75% of the company’s approximate $11 billion of outstanding unsecured bonds, Frontier expects to eliminate more than $10 billion of debt.

Frontier said the restructuring agreement leaves unimpaired all general unsecured creditors and holders of its secured and subsidiary debt.

Energy trades weaker

Overall market tone was softer with major stock indices weaker on Tuesday.

The iShares iBoxx High Yield Corporate Bond ETF closed down 15 cents to $87.01.

Energy bonds lagged on dampened oil prices.

North Sea Brent crude oil futures for June deliveries fell 48 cents to settle at $66.57 a barrel.

West Texas intermediate crude oil futures for May deliveries dropped 94 cents to settle at $62.44 a barrel, and June deliveries settled down 76 cents to $62.67 a barrel.

Houston-based oil and gas producer W&T Offshore Inc.’s 9¾% senior secured notes due 2023 (Caa2/B) were not active during the session, a source said. The notes were last seen trading Monday at 89 bid.

Oil and gas exploration company Moss Creek Resources Holdings Inc.’s bonds were mostly flat on the day but trading higher than a week ago, a source said.

The company’s 7½% senior notes due 2026 (Caa2/B) were seen at 90 bid on Tuesday. The notes traded at the 84 bid area at the start of the prior week.

Moss Creek’s 10½% notes due 2027 were mostly unchanged at 95 bid but also about 6 points better from the start of last week.

S&P Global Ratings upgraded the company to B- from CCC+ and the notes to B from B- on Friday.

The agency said trading prices on Moss Creek’s bonds have improved to 85 cents to 95 cents on the dollar from around 40 cents in March 2020, lessening chances of a distressed debt repurchase.

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