TPC drops; Talen soft; Bausch, MultiPlan under pressure; Endo improves; Evergrande up

By Cristal Cody

Tupelo, Miss., Nov. 12 – TPC Group Inc.’s bonds sank in post-holiday secondary trading on Friday as the company moved up the release of its third-quarter earnings report.

The chemical manufacturer’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) ended the week down nearly 10 points.

Market tone was mostly higher with the Nasdaq up 1% as volatility waned on Friday.

The iShares iBoxx High Yield Corporate Bond ETF edged up 3 cents to $86.85 after falling 49 cents on Wednesday.

Oil prices continued to give back during the session.

West Texas Intermediate crude oil benchmark futures for December deliveries settled 80 cents lower at $80.79 a barrel.

Talen Energy Supply LLC’s bonds were mostly flat after weakening ahead of the holiday.

In the health care space, Bausch Health Cos. Inc.’s 5% senior notes due 2029 (B3/B/B) improved about ¼ point on Friday but were ending the week down about 2 points.

MultiPlan Corp.’s paper was under pressure following a strong earnings report.

The company’s 5¾% senior notes due 2028 (B3/B-) headed out over 5 points softer on the week.

Endo International plc’s 6% senior notes due 2028 (Caa3/CCC-) saw strong volume on Friday with $13 million of supply and the paper ending the week about 1 5/8 points better.

Elsewhere, Kaisa Group Holdings Ltd.’s 9 3/8% senior notes due 2024 (C//CCC-) traded 1½ points higher as the company faces liquidity concerns following a missed debt payment and ahead of $400 million of bonds due in December.

Other property developers in China that are facing defaults after missing debt payments include China Evergrande Group, Fantasia Holdings Group Co. Ltd. and Modern Land (China) Co., Ltd.

Evergrande’s 8¾% senior notes due 2025 (C/C/C) were ¼ point better on the day.

China’s government is expected to contain the spillover from the real estate sector, according to a BofA Securities Inc. research note on Friday.

“Practically speaking we think this means a handful of most levered USD cap structures there could default, but most will end up funding themselves domestically going forward,” BofA said. “As a result, China USD HY/IG markets could shrink considerably as the [government] is pushing to limit dependency on USD funding.”

Distressed market shrinks

Meanwhile on Friday, S&P Global Ratings reported the amount of distressed debt has shrunk by more than 70% since October 2020.

Reductions in the oil and gas space and media and entertainment sector were the largest contributors of the decline.

“Despite the downward trends, the amount of debt rated B- and below remains very high, as inflation and supply chain disruptions pose a challenge to operating performance in certain sectors,” S&P said.

The current amount of U.S. corporate debt rated B- or lower is nearly $234 billion, higher than the five-year average of $225 billion, S&P said.

TPC Group down

TPC Group’s bonds dove over Friday’s session, a market source said.

TPC’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) traded at the 91 bid area on Monday, dipped to 90¾ bid on Tuesday and declined to the 88½ bid area on Wednesday.

On Friday, the Houston-based chemical manufacturer’s notes traded as high as 83 bid before sliding to 80 bid by the close.

TPC Group moved up the release of its third-quarter earnings results for investors to Friday from Sunday. An investor conference call was rescheduled for after the markets closed Friday instead of its original scheduled time on Monday.

Talen mostly flat

Looking at utilities, Talen Energy’s bonds were mostly flat after weakening ahead of the Veterans Day holiday, a source said.

Talen’s 6½% senior notes due 2025 (B3/CCC+/B) were quoted at the 66¼ bid area.

The notes slid over 2 points on Wednesday.

The Woodlands, Tex., and Allentown, Pa.-based power company’s 10½% notes due 2026 (B3/CCC+/B) quieted during the session after trading down 2½ points Wednesday to 71 bid.

Health care mixed

In the health care space, Bausch Health’s 5% senior notes due 2029 (B3/B/B) improved about ¼ point to the 87¼ bid area on Friday but were ending the week down about 2 points, a source said.

The Quebec-based pharmaceutical company’s notes were under pressure following Bausch’s report that it may have a tax liability after the U.S. Internal Revenue Service challenged capital losses it claimed in 2017.

MultiPlan’s paper also has been under pressure this week after the company reported strong earnings.

MultiPlan subsidiary MPH Acquisition Holdings LLC’s 5¾% senior notes due 2028 (B3/B-) were quoted at 89 bid on Friday, down over 5 points from a week ago, a source said.

The New York-based health care payment and network solution provider announced in the previous week that earnings came in at $78.2 million versus a loss of $288.4 million a year ago.

In other pharmaceutical paper, Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) were quoted at 77 1/8 bid on $13 million of volume on Friday, a source said.

The Dublin-based pharmaceutical maker’s bonds were about 1 5/8 points better on the week.

Kaisa, Evergrande up

In distressed emerging markets issues, Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) traded 1½ points higher at 28½ bid Friday on $2 million of volume, a source said.

Kaisa was downgraded during the week by Moody’s Investors Service, Fitch Ratings and S&P over depleted liquidity and a high risk of nonpayment on its debt.

The Shenzhen, China-based real estate developer faces $400 million of bonds due in December.

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) traded ¼ point better on Friday at 23½ bid as the Shenzhen, China-based real estate developer staved off another debt default this week, a source said.

Secondary volume totaled $2 million for the issue on Friday.

Distressed returns soften

Distressed index returns softened over the front half of the week.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return on Wednesday was 0.15%, down from 0.18% on Tuesday and 0.73% on Monday.

Month-to-date total returns improved to 1.13% on Wednesday, compared to 0.99% on Tuesday and 0.81% on Monday.

Year-to-date total returns were up at 30.49% from 30.3% the previous day and 30.07% at the start of the week.

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