PBF mostly higher, strong on week; Talen bonds rebound; Endo, Mallinckrodt notes rise

By Cristal Cody

Tupelo, Miss., Aug. 26 – Energy bonds mostly held onto gains in the distressed secondary market on Thursday despite oil prices pulling back.

PBF Holding Co. LLC’s 6% senior notes due 2028 (B3/B) went into the session up 9½ points since Friday and headed out by the close 10 points stronger week to date, sources said.

The notes traded ½ point better on Thursday.

The rally in PBF’s paper is attributed to U.S. president Joe Biden’s administration preparing to lower renewable fuel volume requirements, according to a market source.

Talen Energy Supply LLC’s paper improved about 2¾ points to 3¼ points after losing ground in the previous two sessions.

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) recovered 2¾ points on over $11 million of secondary supply Thursday.

Elsewhere, distressed pharmaceuticals bonds edged up.

Endo International plc’s bonds traded about ½ point better after actions taken by Moody’s Investors Service and S&P Global Ratings.

The company also is consulting with Skadden, Arps, Slate, Meagher & Flom and PJT Partners on its forward strategy, a source said.

Mallinckrodt LLC’s bonds were about 1¾ points to 2 points higher on Thursday.

PBF notes active

PBF’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) were unchanged at 93½ bid late afternoon on $4.5 million of secondary supply, a market source said.

The notes added 1¾ points on $4.82 million of secondary supply Wednesday and picked up 2½ points Tuesday on volume totaling more than $22 million.

PBF’s 6% senior notes due 2028 (B3/B/B+) rose nearly ½ point to trade near the 61½ bid area on $1 million of trading supply on Thursday.

Meanwhile, the Parsippany, N.J.-based petroleum refiner’s 7¼% senior notes due 2025 (B3/B/B+) fell ½ point to 65 bid during the session on $1.5 million of secondary volume.

Talen improves

Talen’s paper improved about 2¾ points to 3¼ points on Thursday after declining about 1¾ points to 8 7/8 points on Wednesday and 1¼ points to 4 points on Tuesday, a source said.

Talen’s 6½% senior notes due 2025 (B3/CCC/B-) climbed 2 7/8 points to 39 7/8 bid on $7.75 million of volume during the session.

The notes softened 3 points on Wednesday and declined 1¼ points on Tuesday after gaining about 1½ points on Monday.

Talen’s 10½% senior notes due 2026 (B3/CCC/B-) recovered 2¾ points to head out at 41¾ bid on over $11 million of secondary supply Thursday.

The Woodlands, Tex., and Allentown, Pa.-based power company’s bonds dropped 1¾ points on Wednesday and fell 4 points on Tuesday after gaining 1¾ points at the start of the week.

Endo notes up

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC+) rose ½ point to 64¼ bid in steady action over Thursday’s session, a source said.

The issue saw $5 million of secondary volume.

Moody’s said Wednesday it downgraded the company’s bonds by one notch and changed the outlook to negative due to Endo’s potential cash flow outflows related to opioid litigation.

S&P Global Ratings said in the prior session that it placed Endo’s ratings on CreditWatch with negative implications due to the potential for massive legal liabilities resulting from the opioid lawsuits.

Endo announced on July 22 that subsidiaries Endo Health Solutions Inc. and Endo Pharmaceuticals Inc. had reached a $35 million opioid-related settlement in the Circuit Court for Sullivan County, Tenn.

The Dublin-based pharmaceuticals maker’s settlement followed the announcement on July 21 up to a $26 billion settlement with states from Johnson & Johnson and distributors AmerisourceBergen Drug Corp., Cardinal Health Inc. and McKesson Corp. over the opioid epidemic.

New York attorney general Letitia James announced in July that its opioid-related lawsuits against companies including Endo Health Solutions, Teva Pharmaceuticals USA, Allergan Finance and Mallinckrodt LLC, were continuing.

The state’s lawsuit against Mallinckrodt is winding through U.S. Bankruptcy Court.

Mallinckrodt better

Mallinckrodt’s paper was active over the day after seeing few trades this month, a source said.

The company’s 5 5/8% senior notes due 2023 were 2 points better at 66½ bid.

Mallinckrodt’s 5½% notes due 2025 traded 1¾ points better over the session at 66¾ bid.

A confirmation hearing for the bankrupt pharmaceuticals maker’s joint Chapter 11 plan of reorganization and disclosure statement 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 positive

Market tone was soft as measured volatility climbed over 12% and oil prices gave back some of the week’s gains.

The iShares iBoxx High Yield Corporate Bond ETF edged down 5 cents to $87.72.

The Chicago Board Options Exchange’s CBOE Volatility index rose 12.21% to 18.84 by the close.

North Sea Brent crude oil futures for October deliveries fell $1.18 to settle at $71.07 a barrel.

West Texas Intermediate crude oil benchmark futures for October deliveries settled down 94 cents at $67.42 a barrel.

Distressed index daily returns stayed positive through midweek, according to the latest data.

The S&P U.S. High Yield Corporate Distressed Bond index total return was 0.33% on Wednesday, down from 1.25% on Tuesday and 0.47% on Monday.

Month-to-date total returns improved to minus 0.21% from minus 0.54% on Tuesday and minus 1.77% at the start of the week.

Distressed year-to-date total returns climbed to 23.63% on Wednesday from 23.23% in the previous session and 21.7% on Monday.

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