Diamond Sports extends gains; PBF better; Talen declines; pharma mixed; Kaisa drops

By Cristal Cody

Tupelo, Miss., Nov. 9 – Diamond Sports Group LLC’s bonds remained stronger Tuesday following parent Sinclair Broadcast Group Inc.’s announcement that it had taken on a portion of the company’s debt.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) are trading 4½ points better week to date.

The company’s notes were up almost 3 points on Monday and picked up another 1¾ points on Tuesday.

“D-Sports’ 6 5/8% notes look like they were up the most in distressed,” a source said. “The unsecureds were the star of the show yesterday.”

In the distressed pharmaceuticals space, Endo International plc’s notes continued to gain in an extended rally after a California court ruling last week shielded the company from opioid-related liabilities.

Mallinckrodt plc’s bonds have come down a bit since rallying nearly 10 points last week following Endo’s court ruling.

Notes from generic pharmaceutical manufacturer Lannett Co., Inc. also softened Tuesday following a downgrade from Moody’s Investors Service.

Market tone was mixed but improved in the junk market as stocks slipped during the session.

The iShares iBoxx High Yield Corporate Bond ETF added 7 cents to close at $87.46.

Oil extended gains, sending the West Texas Intermediate crude oil benchmark futures for December deliveries up $2.22 to settle at $84.15 a barrel.

Distressed secondary market action was quieter with “not a lot of activity today,” a source said.

Bonds in the energy space were mixed.

PBF Holding Co. LLC’s 7¼% senior notes due 2025 (Caa1/B/B-) traded over 2 points higher.

Talen Energy Supply LLC’s 6½% notes due 2025 (Caa1/CCC/B-) slid 4¼ points.

Elsewhere, Kaisa Group Holdings Ltd.’s dollar notes softened with trading in the issuer’s Hong Kong-listed shares remaining suspended since trading was halted on Friday.

Kaisa’s 9 3/8% senior notes due 2024 (Caa2//CCC-) were down 2 points Tuesday following a downgrade from Fitch Ratings after company units reportedly missed debt payments in the prior week.

The sector has been pressured with other missed debt payments from issuers including China Evergrande Group in September and Fantasia Holdings Group Co. Ltd. and Modern Land (China) Co., Ltd. in October.

China Evergrande faces more debt due this month, including $82.5 million of interest payments that were due Saturday and the expiration of grace periods for other bonds coming up on Thursday, according to Fitch.

The Shenzhen, Guangdong Province, China-based real estate developer’s paper remained quiet in the secondary market Tuesday, a source said.

Diamond Sports better

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) were quoted at 30 bid, up 1¾ points on the day on $14 million of secondary supply, sources said.

The notes have rallied 4½ points over the past two sessions.

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) traded mostly flat to modestly better at 54 bid by late afternoon.

The issue has improved from trading Friday at 52¾ bid.

Sinclair announced Monday that it has purchased and assumed the lenders’ rights and obligations for approximately $184.4 million under Diamond Sports’ existing accounts receivable securitization facility.

Sinclair also amended the facility to increase the maximum limit availability to up to $400 million from up to $250 million and to extend the maturity by one year to Sept. 23, 2024.

In October, Sinclair reported it was continuing to seek new funding for its Chesapeake, Va.-based sports broadcast group unit.

The Hunt Valley, Md.-based diversified media company’s total debt as of Sept. 30 was $12.53 billion, which includes $8.12 billion of debt from Diamond Sports.

Endo improves

In the pharmaceuticals space, Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) saw a “lot of volume today,” a source said.

The issue was last seen trading at 76½ bid, up from 75 7/8 bid on Monday.

Endo’s 9½% senior secured notes due 2027 (Caa2/CCC+) climbed about ¾ point to 103 bid after going out Monday at 102¼ bid.

The Dublin-based pharmaceutical maker’s bonds have improved since a California state trial ruled a week ago that its subsidiaries are not liable for opioid-related claims.

Mallinckrodt’s bonds have come down a bit since rallying nearly 10 points last week following Endo’s court ruling.

Mallinckrodt’s 5¾% senior notes were 1¼ points weaker on the day at 57¼ bid.

Opioid-related lawsuits against the bankrupt pharmaceutical maker are moving through bankruptcy court.

Mallinckrodt’s bankruptcy hearing is ongoing with the company on Monday seeking a 120-day extension for the filing of its Chapter 11 plan.

The Dublin- and St. Louis-based company filed for Chapter 11 on Oct. 12, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

Notes from Philadelphia-based generic pharmaceutical manufacturer Lannett also softened Tuesday following a downgrade from Moody’s in the prior session.

Lannett’s 7¾% senior secured notes due 2026 (B3/B) dropped 2½ points to 75¾ bid, a source said.

Secondary volume was active with $5 million of issues traded.

PBF notes higher

PBF Holding’s 7¼% senior notes due 2025 (Caa1/B/B-) traded over 2 points higher at the 78 bid range on Tuesday, a source said.

The issue attracted over $3.7 million of secondary volume.

The Parsippany, N.J.-based petroleum refiner’s notes have improved from trading at the 58 bid area in August.

Talen trades down

Meanwhile, Talen Energy Supply’s 6½% notes due 2025 (Caa1/CCC/B-) slid 4¼ points to 64 bid by the close, a source said.

Trading supply totaled $1 million.

The Woodlands, Tex. and Allentown, Pa.-based private power company on Tuesday announced the naming of a new chief financial officer after elevating the previous CFO to chief executive officer.

Kaisa moves lower

In China’s property developer space, Kaisa Group’s dollar 9 3/8% senior notes due 2024 (Caa2//CCC-) dropped 2 points to 28½ bid during Tuesday’s session, a source said.

The notes were down ½ point on Monday.

The issue has sunk about 60 points since September.

Fitch said Tuesday that it dropped the company and its notes to CCC- from CCC+ based on deteriorating liquidity.

The Shenzhen, China-based real estate developer has a large amount of dollar debt due through the end of 2022, including $400 million of bonds due in December, $550 million of notes due in April 2022, $1.1 billion of notes due in June 2022 and about $1.7 billion of notes due in the second half of 2022, according to Fitch.

Distressed returns higher

Distressed index returns opened the week stronger.

The S&P U.S. High Yield Corporate Distressed Bond Index’s one-day total return was 0.73% on Monday, improved from negative-0.05% in the same session a week ago.

Month-to-date total returns improved to 0.81% on Monday from negative-0.05% in the Nov. 1 session.

Year-to-date total returns on Monday totaled 30.07% versus 28.97% in the week ago session.

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