Mallinckrodt bonds mixed; Endo up; Envision, Diamond Sports, GEO decline; Sunac down

By Cristal Cody

Tupelo, Miss., Dec. 8 – Health care-related names remained mixed in the distressed bond secondary market on Wednesday.

Paper from Mallinckrodt plc was mostly lower following gains made after a bankruptcy court judge’s ruling on Monday in the company’s favor against antitrust claims.

Endo International plc’s 6% senior notes due 2028 (Caa3/CCC-) were about ¾ point better by the day’s close.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Ca/CC) fell over 2¾ points in thin activity.

Market tone was mixed on Wednesday after strong gains in the prior session.

The iShares iBoxx High Yield Corporate Bond ETF edged down 2 cents to $86.82 after improving 47 cents on Tuesday and 36 cents on Monday.

Oil prices settled modestly higher.

West Texas Intermediate crude oil benchmark futures for January deliveries rose 32 cents to settle at $72.36 a barrel following gains of $2.56 on Tuesday and $3.23 on Monday.

In other distressed issues, Diamond Sports Group LLC’s unsecured notes declined.

GEO Group Inc.’s paper also has drifted lower since the company announced that it will terminate its real estate investment trust status and discontinue its quarterly dividend.

Default fears in China’s property developer space remained in focus as trading in Kaisa Group Holdings Ltd.’s shares on the Hong Kong Stock Exchange was halted on Wednesday.

Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) were unchanged on the day.

Sunac China Holdings Ltd.’s offshore bonds dropped 5 points over the session.

Mallinckrodt mostly lower

Mallinckrodt’s bonds were flat to weaker on Wednesday after softening 1½ points to 2 points in the prior session, a source said.

The company’s 5½% senior notes due 2025 fell more than 2¼ points to under the 57¾ bid range. Secondary supply was light with $1 million of volume.

The notes were down 1½ points on Tuesday.

Mallinckrodt’s 5¾% senior notes due 2022 were last seen on Tuesday at 58 bid after rallying 4 points on Monday following the bankruptcy court’s ruling in the company’s favor against antitrust claims.

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

Mallinckrodt received a court order in November that extended the reorganization plan filing period by 120 days through March 8 and the solicitation period by 120 days through May 10.

Endo improves

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) were trading about ¾ point better at the 77¾ bid area by the day’s close, a source said.

The Dublin-based pharmaceutical maker’s notes are about 1½ points higher since Friday.

Envision declines

In other health care issues, Envision Healthcare’s 8¾% senior notes due 2026 (Ca/CC) declined over 2¾ points in thin secondary activity on Wednesday to the 56½ bid range, a source said.

The notes have softened over 10 points from a month ago.

Nashville-based Envision is a health care company and hospital-based physician group.

Diamond Sports down

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CC) dropped 1½ points to 24¼ bid on $5 million of issues traded, a source said Wednesday.

The notes rallied about 3½ points following parent Sinclair Broadcast Group Inc.’s report last week that Diamond Sports inked a multiple-year renewal of its distribution rights agreement with the National Hockey League.

The Chesapeake, Va.-based sports broadcast group’s networks serve as the televised home to more than half of all U.S.-based MLB, NHL and NBA teams.

GEO notes soft

GEO Group’s 6% guaranteed senior notes due 2026 (B2/CCC) fell about 1¼ points to the 83½ bid area on Wednesday, a source said.

The issue is trading over 3 points lower week to date.

GEO announced on Dec. 2 that its board voted to terminate its real estate investment trust status and become a taxable C corporation, effective for the fiscal year ending Dec. 31, 2021.

The board also voted to discontinue the company’s quarterly dividend.

The moves come after the Biden administration-led U.S. Justice Department cut ties with private prison operators at the start of the year.

GEO is a Boca Raton, Fla.-based company that specializes in secure and processing facilities and electronic monitoring.

Developers mixed

Kaisa’s 9 3/8% senior notes due 2024 (C//CCC-) were flat at 35 bid after improving 1 point on Tuesday, a source said.

The notes fell 3¼ points on Monday.

Trading in Kaisa’s shares on the Hong Kong Stock Exchange was halted on Wednesday, pending a company announcement.

The Shenzhen, China-based real estate developer has $400 million outstanding of 6½% bonds that matured on Tuesday.

Sunac China’s dollar bonds were lower during the session.

The Tianjin, China-based property developer’s 5.95% notes due 2024 (B1/BB-) sank 5 points to 71¾ bid on $3 million of secondary supply, a source said.

Default fears in China’s property space has spread with issuers including Kaisa, China Evergrande Group, Fantasia Holdings Group Co. Ltd., Sinic Holdings (Group) Co. Ltd., China Properties Group Ltd., Modern Land (China) Co. Ltd. and Sunshine 100 China Holdings Ltd. missing bond payments over the past few months.

Distressed returns higher

Distressed index returns improved on Tuesday, according to the latest data available.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return rose to 0.58% from 0.34% on Monday.

Month-to-date returns grew to 2.4% versus 1.81% at the start of the week.

Year-to-date total returns also were higher at 24.69% compared to 23.98% on Monday.

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