Washington Prime notes higher; Mallinckrodt mixed; Talen rallies; Diamond Sports down

By Cristal Cody

Tupelo, Miss., June 16 – Washington Prime Group, LP’s paper continued to tread higher over Wednesday’s session in the distressed secondary market.

The issuer’s 6.45% notes due 2024 (C/D/CC) added 1¼ points to 76¼ bid, a source said.

The notes traded Tuesday up 2 points after climbing to the 73½ bid range on Monday from the 64½ bid area on Friday.

Washington Prime Group Inc. announced on Monday that the company filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on Sunday.

The company had been in a forbearance agreement since March 16 over a missed payment on the 6.45% notes.

The Columbus, Ohio-based shopping center real estate investment trust disclosed in February that its operating partnership withheld a $23.2 million interest payment that was due Feb. 15.

The company plans to restructure its corporate-level debt, either through a full equitization of its unsecured notes or an alternative value-maximizing transaction that would repay in full in cash all of its corporate debt.

Washington Prime has secured a $100 million non-amortizing multiple draw super-priority senior secured debtor-in-possession term loan facility from the consenting creditors to support daily operations.

Fitch dropped the issuer’s default rating to D from RD on Tuesday, while upgrading its senior notes to CC from C.

Mallinckrodt eyed

Meanwhile, distressed pharmaceutical bonds were mixed on Wednesday.

The default rate for the health care/pharmaceutical space, along with technology and retail, is expected to end the year at or below 1%, Fitch Ratings forecasts.

Bankrupt pharmaceuticals maker Mallinckrodt plc’s paper was mixed in distressed secondary trading after the company filed a new joint Chapter 11 plan of reorganization and received conditional approval of its disclosure statement, a source reported.

The company’s 4¾% notes due 2023 fell more than 1 point to trade under the 21½ bid area in thin activity.

The notes are up from the 6 bid area seen at the start of 2021.

Mallinckrodt’s 5 5/8% notes due 2023 jumped 3¼ points to 68 bid on $2 million of trading supply Wednesday.

The issue traded at 36½ bid in early 2021.

The company also reported on Tuesday that it received approval from the U.S. Food and Drug Administration for a treatment for adults with thermal burns.

Mallinckrodt, which has principal offices in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

Endo modestly softens

Elsewhere in the distressed pharmaceuticals space, Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) softened 3/8 point to 66 3/8 bid in strong trading supply Wednesday, a source said.

The notes have declined 1 1/8 points from Friday.

The issue traded at the start of the year in the 84 bid area.

Parent Dublin-based pharmaceuticals maker Endo International plc reported soft first-quarter earnings and revenue in May.

Talen notes rally

Overall market tone was mixed following the Federal Reserve’s monetary policy statement on Wednesday with the first interest rate hikes eyed for 2023.

The iShares iBoxx High Yield Corporate Bond ETF fell 12 cents to $87.41.

Oil prices settled higher.

North Sea Brent crude oil futures for August deliveries rose 40 cents to $74.39 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries improved 3 cents to settle at $72.15 a barrel. August deliveries settled 9 cents higher at $71.95 a barrel.

In the secondary market, The Woodlands, Tex., and Allentown, Pa.-based power company Talen Energy Supply LLC’s bonds rallied about 1½ points to 5¾ points in heavy trading action on Wednesday, a source said.

The 6½% senior notes due 2025 (B3/CCC+/B) jumped 4¾ points to 70¼ bid on more than $8.5 million of secondary volume.

The issue remains softer than the 84½ bid range seen at the end of May and the 82 bid area at the start of the year.

Talen’s 10½% notes due 2026 (B3/CCC+/B) added 5¾ points to trade at 74¼ bid on nearly $12 million of trading activity.

The notes ended May at 91 bid while trading at the 89 bid area in early January.

On the longer end, the company’s 6% notes due 2036 (B3/CCC+/B) also improved 3¼ points to 57¼ bid on more than $7 million of secondary action, the source said.

Diamond Sports declines

Meanwhile, Diamond Sports Group LLC’s 6 5/8% senior notes due 2027 (Caa2/CCC-) fell 3 points in trading on Wednesday to 51½ bid on more than $3.5 million of secondary volume, a source said.

The notes have softened about 6 points since the start of June.

The Chesapeake, Va.-based sports broadcast group’s bonds have been active on chatter of potential financing or refinancing transactions.

In February, parent Sinclair Broadcast Group, Inc. reported soft guidance for the company, along with an interest in liability management initiatives that could include a debt exchange or redemption.

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