Endo up on settlement; Mallinckrodt mixed; market returns eyed; Transocean, Callon rise

By Cristal Cody

Tupelo, Miss., July 22 – Endo International plc’s bonds rocketed higher on Thursday after the company announced a $35 million settlement related to the opioid epidemic.

Bankrupt pharmaceuticals maker Mallinckrodt LLC’s paper was mixed.

Distressed energy bonds improved along with oil prices on Thursday.

Transocean Inc.’s notes climbed about 1 point to 2¼ points during the session.

Callon Petroleum Co.’s bonds also were higher after sliding in Monday’s sell-off.

Secondary market action was stronger at the start of the session.

Focus turned toward a heavy slate of more than 100 second-quarter earnings reports released over the day from companies including American Airlines Group Inc.

“This morning was active, and then things died out,” a source said.

Bonds “were higher out of the gate and then sold off and then picked back up,” the source added. “It was a bit of mixed tone going out.”

Endo notes up

Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) were quoted at 69½ bid, 70½ offered, up 1½ points on the day, a trader said.

The notes traded nearly 5¾ points better on Tuesday and picked up 2 points on Wednesday.

Endo’s 6 1/8% senior secured first-lien notes due 2029 (B2/B) traded “up a bit” to 99½ bid, 100¼ offered on Thursday, the trader said.

The notes were quoted in the prior session at 99¾ bid.

The secured notes were issued in a $1.23 billion offering at par on March 25 by Endo Luxembourg Finance Co. I Sarl and Endo U.S. Inc.

Endo announced on Thursday that subsidiaries Endo Health Solutions Inc. and Endo Pharmaceuticals Inc. reached a $35 million agreement to settle the case involving nine counties, 18 cities and one individual plaintiff in the Circuit Court for Sullivan County, Tenn.

The Dublin-based pharmaceuticals maker said the settlement includes no admission of wrongdoing, fault or liability of any kind by Endo, and the settlement value should not be extrapolated to other opioid-related cases or claims.

The settlement follows the announcement on Wednesday of up to a $26 billion settlement with Johnson & Johnson and distributors AmerisourceBergen Drug Corp., Cardinal Health Inc. and McKesson Corp. over the opioid epidemic.

Pennsylvania attorney general Josh Shapiro announced Wednesday the national agreement would resolve the claims of states and local governments, including nearly 4,000 that have filed lawsuits in federal and state courts.

On Tuesday, New York attorney general Letitia James announced the state reached a $1.1 billion agreement with the distributors, while its lawsuits against other companies, including Endo Health Solutions, Teva Pharmaceuticals USA, Allergan Finance and Mallinckrodt LLC, were continuing separately.

Mallinckrodt active

Mallinckrodt’s 4¾% notes due 2023 gained about ½ point to 24 bid on Thursday, a market source said.

The bankrupt pharmaceuticals maker’s 5½ notes due 2025 were quoted down 2 points to 66 bid in heavy trading volume.

The New York’s attorney general’s lawsuit against Mallinckrodt, filed in March 2019, was reported Tuesday moving separately through U.S. Bankruptcy Court.

Mallinckrodt filed a new joint Chapter 11 plan of reorganization and received conditional approval of its disclosure statement on June 16.

A hearing to confirm the plan is scheduled for Sept. 21-22.

The company, based 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.

Distressed returns up

Stocks were higher along with crude oil prices after Monday’s plunge sent energy bonds down about 5½ points to 9 points.

The iShares iBoxx High Yield Corporate Bond ETF edged up 5 cents on Thursday to $87.78.

West Texas Intermediate crude oil benchmark futures for September deliveries settled $1.61 higher at $71.91.

North Sea Brent crude oil futures for September deliveries rose $1.56 to settle at $73.79 a barrel.

The S&P U.S. High Yield Corporate Distressed Bond index saw a second consecutive day of positive returns in the previous session.

The index had one-day total returns of 0.46%, down from 0.82% on Tuesday but better than where the index ended Monday at minus 1.77%.

Negative month-to-date total returns narrowed to minus 2.92% on Wednesday from minus 3.37% on Tuesday and minus 4.15% on Monday.

Year-to-date total returns ended the prior session at 24.13%, up from 23.56% on Tuesday and 22.56% at the start of the week.

Transocean, Callon gain

In the energy space, Transocean’s 7½% notes due 2026 (Ca/CCC+) traded up 1 point to 80½ bid, a source said.

The notes added 1 7/8 points on Wednesday after dropping 1 7/8 points on Tuesday and 6 points on Monday.

The Vernier, Switzerland-based offshore driller’s 8% notes due 2027 (Ca/CCC-) climbed 2¼ points to 76¾ bid on Thursday.

The notes sank 9 points on Monday, traded 3¼ points higher on Tuesday and improved about ¾ point on Wednesday.

Houston-based Callon Petroleum’s 8% senior notes due 2028 (Caa2/D) also were better after sinking 6¼ points to 90 bid on Monday, a source said.

The notes were quoted late afternoon up about ¼ point at 95¾ bid.

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