Diamond Sports mixed; Mallinckrodt gains as bankruptcy end nears; Endo soft; TPC down

By Cristal Cody

Tupelo, Miss., Feb. 4 – Diamond Sports Group LLC’s secured notes improved ¼ point while its unsecured notes slipped 1¼ points as the start of a solicitation of consents for a debt exchange was expected to begin Friday.

In other distressed secondary supply, Mallinckrodt plc’s bonds are up about 1 point to 1¾ points since a bankruptcy court confirmed the company’s reorganization plan.

Endo International plc’s 6% senior notes due 2028 (Caa3/CCC-) are trading over 5 points softer so far in 2022 since announcing another opioid-related settlement in January.

TPC Group Inc.’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) remained soft on Friday after the company confirmed it missed coupon payments this week, though the risk was already priced in on the issue in the secondary space, a source said.

Market tone improved on Friday on the back of strong employment growth reported for January.

The Labor Department said that U.S. nonfarm payroll reemployment rose by 467,000 in January, outpacing the 125,000 increase forecasted.

Volatility dove over 8% on the day following the strong jobs data.

The Chicago Board Options Exchange’s CBOE Volatility index fell 8.62% to 22.25 after climbing 10.23% on Thursday.

Stocks mostly gained on Friday, while the junk space was softer with the iShares iBoxx High Yield Corporate Bond ETF down 33 cents to $83.77.

Oil prices rallied as cold weather bore down across the country.

West Texas Intermediate crude oil benchmark futures for March deliveries, which settled up $2.01 on Thursday, climbed another $2.04 to settle at $92.31 a barrel.

Distressed secondary supply was light over the day, sources reported.

“High yield traded off a point,” a source said. “Not a lot of distressed was up.”

Diamond Sports mixed

Diamond Sports’ secured notes improved ¼ point while its unsecured notes were over 1¼ points weaker on Friday, a market source said.

The company’s 5 3/8% senior secured notes due 2026 (Caa1/CCC) softened about ½ point in early trading on Friday before improving ¼ point by late afternoon to 46 bid.

The secured notes are about ½ point better on the week.

Diamond Sports’ 6 5/8% senior unsecured notes due 2027 (Ca/CC) fell over 1¼ points by late afternoon to 25½ bid, unchanged from a week ago, the source said.

On Monday, parent Sinclair Broadcast Group Inc. reported in a regulatory filing that Diamond Sports received consent to extend the start of the solicitation of consents for the exchange of term loans under its agreement to Friday.

The Chesapeake, Va.-based sports broadcast group announced on Jan. 13 a $600 million new money financing and debt exchange of its 5 3/8% senior secured notes due 2027 and 12¾% notes due 2026.

Mallinckrodt higher

Mallinckrodt’s bonds traded about 1 point to 1¾ points better on Friday following court confirmation of its bankruptcy reorganization plan with market expectations of a bankruptcy exit by mid-2022, a source said.

“These are trailing up,” the source said. “There’s a good amount of round lots.”

Mallinckrodt’s 5¾% senior notes due 2022 were quoted Friday at 54 bid, up ½ point from Thursday and 1½ points stronger from Wednesday.

Mallinckrodt’s 5½% senior notes due 2025 also added 1¾ points over Friday’s session to 54¾ bid with $2 million of paper reported traded.

The company announced on Thursday that its reorganization plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware.

The pharmaceuticals company filed an amended Chapter 11 plan and first amended joint plan of reorganization in 2021 after first filing on Oct. 12, 2020.

Mallinckrodt’s restructuring agreement includes settlements that resolve opioid claims against the Dublin- and St. Louis-based pharmaceutical company.

Endo paper lower

Also in the pharmaceuticals space, Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) went out about ½ point lower at the 67½ bid area, a source said Friday.

The issue has declined over 5 points since December.

Endo announced on Jan. 18 it reached a $65 million opioid-related settlement with Florida, which followed announcements in September of a $7.5 million agreement with the Louisiana Attorney General's office and a $50 million agreement to settle three opioid-related cases in New York.

The Dublin-based pharmaceuticals maker announced in July 2021 a $35 million settlement in Tennessee.

TPC notes off

TPC’s 10½% senior secured notes due 2024 (Caa2/D/CC) saw thin trading on Friday at 55 bid, a source said.

The bonds were down from Monday’s bid of 66¾ but have not reacted too strongly since TPC missed approximately $53 million of coupon payments due Tuesday.

“Sometimes, we do expect it to trade down after missing a coupon, but it was kind of priced in because after the last quarter financials came out, [the consensus was] they’re not going to be able to make the coupon payment,” the source said.

The notes have declined about 30 points since November.

TPC announced on Thursday that the company is in forbearance until March 18 over payments that were due Tuesday on its 10½% first-priority lien notes and 10 7/8% first-priority lien notes due 2024.

The Houston-based chemical manufacturer signed a forbearance agreement with Ad Hoc Group Ltd., which is providing it with $52 million of liquidity through a commitment to purchase additional senior secured priming notes due 2024.

Distressed index softens

Distressed returns softened over Thursday’s session, according to the latest market data.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return declined to minus 0.47% from 0.61% on Wednesday, 0.5% on Tuesday and 0.66% on Monday.

Month-to-date total returns were down at 0.64% versus 1.11% on Wednesday and 0.5% on Tuesday as February kicked off.

Year-to-date returns were minus 0.9% on Thursday, compared to minus 0.43% on Wednesday, minus 1.03% on Tuesday and minus 1.53% on Monday.

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