Talen paper mixed; Transocean flat; Endo bonds calm; Washington Prime soft; AMC better

By Cristal Cody

Tupelo, Miss., July 28 – Distressed bonds in the energy and pharmaceuticals sectors remained mixed in light secondary action on Wednesday.

Talen Energy Supply LLC’s bonds softened on the short end.

Transocean Inc.’s notes were mostly unchanged on the day after weakening about 2 points to more than 3¼ points on Tuesday and 1 point to 2½ points on Monday.

Distressed pharmaceuticals bonds from Endo International plc and Mallinckrodt LLC were mixed.

Endo International’s bonds traded flat to more than 1 point weaker on Wednesday after pulling back on Tuesday.

The company’s bonds had soared in the prior week after the issuer announced a $35 million opioid-related settlement.

“The senior notes just shot up, and now they’re starting to calm down,” a market source said. “There’s not a lot of movement.”

Mallinckrodt’s bonds were weaker during the session with the 5¾% notes due 2022 down 1 1/8 points at 65½ bid.

In other distressed issues, Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/CC) remained soft on Wednesday in light trading and down more than 5 points since the start of the month.

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) jumped 1 point on Wednesday.

The company’s bonds tend to follow the issuer’s equity – “especially the 12s,” a source said.

Talen notes soften

Talen Energy’s bonds ticked lower during the midweek session, according to market sources.

Talen’s 6½% senior notes due 2025 (B3/CCC+/B-) fell 2¼ points to 55¾ bid.

The notes have plunged from trading in the 90, 88 area in May.

The 7 5/8% notes due 2028 (Ba3/BB-) were up ¾ point to 88, 89.

Fitch Ratings downgraded Talen’s bonds and revised its outlook to negative from stable a week ago.

The Woodlands, Tex., and Allentown, Pa.-based power company’s outlook was revised to negative on June 16 from Moody’s Investors Service.

Transocean steadies

Transocean’s notes improved early in the session before heading out mostly flat to modestly better, a source said.

Transocean’s 7½% notes due 2026 (Ca/CCC+) gained ½ point over the morning but headed out unchanged at 76¾ bid on Wednesday.

The Vernier, Switzerland-based offshore driller’s notes are down more than 10 points since the start of the month.

Market tone mixed

Oil prices headed higher on Wednesday.

North Sea Brent crude oil futures for September deliveries settled up 26 cents to $74.74 a barrel.

West Texas Intermediate crude oil benchmark futures for September deliveries added 74 cents to settle the day at $72.39 a barrel.

Overall market tone was mixed.

Growing clusters of Covid-19 infections from the delta variant has prompted the return of mask requirements in some areas, including in Nevada.

Focus remained on the heavy round of second-quarter earnings reports released over the day, including from Baytex Energy Corp., which was expected to post results after the market closed.

The Federal Reserve left interest rates unchanged following the end of its two-day monetary policy meeting on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF closed up 7 cents to $87.77.

Distressed returns were soft in the first two sessions of the week.

The S&P U.S. High Yield Corporate Distressed Bond index ended the prior session at minus 0.57% versus minus 0.05% on Monday.

Month-to-date total returns were minus 3.83% on Tuesday, compared to minus 3.28% on Monday.

The index’s year-to-date total return narrowed to 22.97% on Tuesday from 23.67% at the start of the week.

Endo flat to softer

Endo International’s bonds traded flat to more than 1 point weaker on Wednesday after pulling back on Tuesday, a source said.

Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) headed out unchanged at 68½ bid after softening 1½ points in the prior session.

The notes climbed 10 points in the prior week following the announcement of settlements related to the opioid epidemic.

Endo’s 7½% notes due 2027 (B2/B) were seen more than 1 point weaker near the 101¼ bid area on light secondary volume of $1.68 million.

The Dublin-based pharmaceuticals maker’s bonds climbed in the prior week after announcing a $35 million opioid-related settlement in Tennessee on Thursday.

Endo’s announcement followed reports of up to a $26 billion nationwide settlement between state and local governments and Johnson & Johnson and distributors AmerisourceBergen Drug Corp., Cardinal Health Inc. and McKesson Corp. over the opioid epidemic.

Mallinckrodt down

Mallinckrodt’s bonds remained weak during the session with the 5¾% notes due 2022 down 1 1/8 points at 65½ bid, a source said.

Secondary volume totaled $1 million.

The pharmaceuticals maker also faces legal action related to opioids with a lawsuit from New York’s attorney general moving 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.

Washington Prime soft

In other bankrupt paper traded Wednesday, Washington Prime Group’s 6.45% notes due 2024 (C/D/CC) were quoted at 61¼ bid in light volume, a source said.

The issue is down 5¾ points since the beginning of the month.

Washington Prime Group Inc. filed for bankruptcy on June 13 following a forbearance period when its operating partnership missed a $23.2 million interest payment on the notes that was due Feb. 15.

The company has received conditional approval of the disclosure statement for its Chapter 11 plan of reorganization from the U.S. Bankruptcy Court for the Southern District of Texas.

The Columbus, Ohio-based shopping center real estate investment trust 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.

AMC notes up

Elsewhere, AMC Entertainment Holdings’ 12% second-lien senior secured notes due 2026 (Ca/C) jumped 1 point to 89 bid during the session, a source said.

The notes shed 1¾ points on Tuesday and fell ¼ point on Monday.

The issue has declined from the 102 bid area at the start of July.

The Leawood, Kan.-based movie theater owner’s stock was up 2.37% on the day.

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