PBF extends declines; Talen recovers; Endo, Mallinckrodt soften; AMC weakens; liquidity thin

By Cristal Cody

Tupelo, Miss., Aug. 3 – Distressed energy bonds headed out mixed in secondary trading on Tuesday as oil prices weakened and volume thinned in the late summer session.

Energy bonds were “difficult to get a handle on” during Tuesday’s session, a source said.

“Oil was off a little bit, but generally the market was better on the margin,” the source said. “Slightly better but not significantly outperforming or underperforming the market.”

PBF Holding Co. LLC’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) softened about 7/8 point after sliding 3 3/8 points in the prior session.

Talen Energy Supply LLC’s bonds have “kind of recovered a little bit” from losses in mid-July with the bonds up about ½ point to 2 points Tuesday, a source said.

Paper from distressed pharmaceuticals manufacturer Endo International plc and Mallinckrodt plc softened Tuesday.

Endo’s notes were off more than 1 point.

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) headed out Tuesday down more than 2¾ points week to date as Covid-19 mask mandates resume in spots across the country.

Secondary market action over the day was “muted,” with trading light over the summer session, a source said.

“Unless you’re an underwriter trading new issues, liquidity is as bad as I’ve ever seen it,” the source said.

Market tone was unchanged to slightly better over the day with traders keeping an eye on the upcoming July jobs report due out Friday.

Measured market volatility eased Tuesday after ramping up in the prior two sessions.

“Overall, it didn’t really feel that great – equities had a nice day, Treasuries were unchanged, but I think there’s a general undertone of concern,” a source said.

PBF trades down

PBF Holding’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) fell about 7/8 point to 88½ bid on Tuesday after sliding 3 3/8 points in the prior session, a source said.

The Parsippany, N.J.-based petroleum refiner’s notes have declined about 15 points since June.

Talen bonds recover

Talen’s 6½% senior notes due 2025 (B3/CCC+/B-) headed out up 1 point at 64 bid on Tuesday, a source said.

The notes added more than 4 points on Monday and are about 5½ points higher from the same day a week ago.

Talen’s 10½% notes due 2026 (B3/CCC+/B-) traded flat to about ½ point better at 71½ bid during the session after adding nearly 2 points on Monday.

The issue has picked up about 7½ points since the same session last week but remains down from the 91 bid range seen at the end of May.

Also Tuesday, Talen’s 7 5/8% notes due 2028 (Ba3/BB-) traded about 1 point to 2 points better at 92¾, a source said.

Distressed index softens

Oil prices settled the day lower, though overall market tone was better, sources said.

North Sea Brent crude oil futures for October deliveries fell 48 cents to settle at $72.41 a barrel.

West Texas Intermediate crude oil benchmark futures for September deliveries settled down 70 cents at $70.56 a barrel after ending Monday $2.69 lower.

Benchmark October deliveries fell 58 cents to settle at $70.03 a barrel.

The iShares iBoxx High Yield Corporate Bond ETF rose 10 cents to $87.44 after softening 25 cents on Monday.

Measured market volatility eased Tuesday after ramping up in the prior two sessions.

The Chicago Board Options Exchange’s CBOE Volatility Index fell 7.3% to 18.04 by the close after climbing 6.69% on Monday.

Meanwhile, distressed returns were soft at the week’s start.

The S&P U.S. High Yield Corporate Distressed Bond Index closed Monday at minus 0.1%.

Third-quarter total returns were minus 3.2% on Monday, while year-to-date distressed total returns totaled 23.07% in the prior session.

Endo pulls back

Endo International’s bonds gave back gains made in July after the Dublin-based pharmaceuticals maker announced a $35 million opioid-related settlement, a source said.

Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) declined 1½ points to 65½ bid.

“It’s been waffling around the mid-60s for the last month or so,” a source said.

The issue is down 2¼ points week to date, but remains about 5 points better since Endo announced the settlement on July 22.

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 declines

Elsewhere in the space, Mallinckrodt’s bonds softened in thin trading during the session, a source said.

The 4¾% notes due 2022 were quoted at 62 bid, down 4 points from Friday.

The notes are trading about 7¾ points weaker month to date.

The pharmaceuticals maker also faces legal action related to opioids with a lawsuit from New York’s attorney general moving through the 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 in the U.S. Bankruptcy Court for the District of Delaware.

AMC notes down

In other distressed trading, AMC Entertainment Holdings’ 12% second-lien senior secured notes due 2026 (Ca/C) fell 1 3/8 points to 86 3/8 bid on Tuesday, a source said.

The issue dropped more than 15 points in secondary trading over July and started August down 1½ points on Monday.

The Leawood, Kansas-based movie theater owner is scheduled to release its second-quarter earnings results after the market closes on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.