AMC bounces back; Transocean drops; Diamond Sports mostly flat; Endo better; Mallinckrodt off

By Cristal Cody

Tupelo, Miss., Aug. 5 – Distressed bonds overall traded a touch better Thursday as market tone improved and oil prices settled higher.

“There was a bounce back from the Delta pullback we’ve had the last week or so,” a source said of Covid-impacted bond issuers. “Some of the Covid plays were back off the lows from yesterday. We’ve seen a little bounce in everything beside energy.”

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) traded 1¼ points better on more than $20 million of secondary volume after sinking 3½ points on Wednesday.

Transocean Inc.’s bonds declined 1¾ points to 2 points during the session.

Diamond Sports Group LLC’s 5 3/8% senior secured notes due 2026 (B2/CCC+) were flat to ½ point weaker.

Bonds in the distressed pharmaceuticals were mixed in light secondary volume.

Endo International plc’s 6% senior notes due 2028 (Caa2/CCC+) improved ¾ point after softening over the front half of the week.

Mallinckrodt plc’s 5¾% notes due 2022 fell ½ point.

Market tone was stronger as volatility thinned ahead of the release of the July jobs report.

The distressed secondary space was a “touch higher” but “pretty quiet” during the session, a source said.

AMC improves

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) rose 1¼ points to 85¼ bid on more than $20 million of paper traded Thursday, a source said.

The secured notes declined 3½ points on Wednesday, 1 3/8 points on Tuesday and 1½ points on Monday.

The bonds are down from the 102 bid area at the start of July.

The Leawood, Kan.-based movie theater chain is scheduled to release second-quarter earnings results on Monday.

Diamond Sports mostly flat

Diamond Sports Group’s bonds traded unchanged to lower in thin volume as the markets waits “on if they’re coming out with a deal or not,” a source said Thursday. “There’s not a ton trading, more in the secured notes.”

The company’s 5 3/8% senior secured notes due 2026 (B2/CCC+) were unchanged to ½ point softer at 59½ bid by the close, about 1 point stronger week to date.

The issue had climbed 1¾ points by the close on Wednesday.

Diamond Sports’ paper has remained soft since parent company Sinclair Broadcast Group, Inc. disclosed in June unsuccessful attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

Transocean bonds down

In energy issues, Transocean’s 11½ senior guaranteed notes due 2027 (Caa3/CCC+) dropped 1¾ points to 97¼ bid on $7.25 million of secondary supply after declining 1 7/8 points Wednesday, a source said.

The Vernier, Switzerland-based offshore driller’s notes have given back more than 10 points over the past month.

Transocean’s 6.8% senior notes due 2038 (C/CCC) fell 2 points to head out at 50½ bid on over $5 million of secondary supply Thursday.

The notes are about 4 points weaker month to date.

Endo edges up

Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) gained ¾ point to head out at 65 bid, a source said.

The issue fell 1¼ points on Wednesday, 1½ points on Tuesday and ¾ point on Monday.

The notes are 2¾ points softer than where the bonds ended the prior week.

Endo’s paper traded about 10 points higher in July after the Dublin-based pharmaceuticals maker announced a $35 million opioid-related settlement.

Mallinckrodt lower

Meanwhile, Mallinckrodt’s 5¾% notes due 2022 fell ½ point on the day to 64½ bid, a source said.

The issue was 1½ points softer week to date.

The pharmaceuticals maker 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 index soft

Overall market tone was stronger after softening in the front half of the week.

North Sea Brent crude oil futures for October deliveries settled up 91 cents at $71.29 a barrel after sinking $2.03 on Wednesday.

West Texas Intermediate crude oil benchmark futures for September deliveries added 94 cents after declining $2.41 in the prior session to settle at $69.09 a barrel.

Benchmark October deliveries recovered 95 cents to settle at $68.74 a barrel following a $2.24 drop Wednesday.

Measured market volatility declined ahead of the Labor Department’s release of the July jobs report on Friday.

The Chicago Board Options Exchange’s CBOE Volatility Index fell 3.84% by the close to 17.28.

The iShares iBoxx High Yield Corporate Bond ETF improved 20 cents to end the day at $87.48 after dropping 16 cents on Wednesday.

Distressed returns were modestly better in the prior session.

The S&P U.S. High Yield Corporate Distressed Bond Index total returns for Wednesday were minus 0.18%, compared to minus 0.26% on Tuesday and minus 0.10% on Monday.

Month-to-date total returns for August to date softened to minus 0.54% on Wednesday from minus 0.36% in the prior session.

Year-to-date total returns for the distressed bond index were 23.23% on Wednesday versus 23.45% on Tuesday and 23.07% on Monday.

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