Endo notes decline following opioid settlement; Diamond Sports drops; Talen Energy up

By Cristal Cody

Tupelo, Miss., April 19 – Endo International plc’s bonds declined on Tuesday following the announcement of a settlement with Alabama to resolve opioid-related claims.

The state has remaining claims against opioid manufacturers Mallinckrodt plc, Purdue Pharma and Insys Therapeutics moving through bankruptcy court.

Mallinckrodt’s notes were thinly traded on Tuesday with the paper remaining mostly quiet since the company’s announcement last week of a new $900 million first-term lien loan while it moves toward exiting Chapter 11.

In March, a $6 billion opioid-related settlement with Purdue Pharma owners and eight states and the District of Columbia was approved in the U.S. Bankruptcy Court for the Southern District of New York.

In other distressed paper active Tuesday, Diamond Sports Group LLC’s secured notes traded down 1 point.

Market tone was mixed over the session with stocks higher and measured volatility lower.

The iShares iBoxx High Yield Corporate Bond ETF closed down 7 cents to $80.04.

May and June oil prices slid over $5.

West Texas Intermediate crude oil benchmark futures for May delivery settled $5.65 lower at $102.56 a barrel.

Talen Energy Supply LLC’s paper was 1 1/8 points to over 2 points better on more than $20 million of secondary action on Tuesday.

Endo paper lower

Endo Finance LLC’s 9½% senior secured notes due 2027 (Caa2/CCC+) dropped 2¼ points to 83½ bid on $7 million of paper traded, a source said.

Endo’s 6% senior notes due 2028 (Caa3/CCC-) also traded at 50½ bid by the end of Tuesday’s session, down 1¼ points from a week ago.

On Tuesday, Alabama attorney general Steve Marshall announced the state settled with Endo, Johnson & Johnson and McKesson Corp. for $276 million over opioid-related claims.

The state had opted out of a $26 billion national settlement reached in February with Johnson & Johnson and McKesson, as well as AmerisourceBergen Corp. and Cardinal Health Inc.

Endo will pay the state $25 million in a lump-sum payment.

“By comparison, two similarly populated states and their subdivisions settled with Endo for 26% and 35% of the total that Alabama was able to secure,” according to the attorney general’s statement.

Johnson & Johnson agreed to pay $70.3 million in a lump-sum payment, and McKesson will pay $141 million over nine years with the settlement funds from the three companies to be used to remediate opioid addictions and deaths.

The companies also will pay approximately $40 million in attorney’s fees and costs for the state.

Endo has settled opioid-related lawsuits in other states, including a $65 million settlement with Florida in January.

In 2021, the company announced a $35 million settlement in Tennessee, a $7.5 million settlement in Louisiana and a $50 million agreement to settle three opioid-related cases in New York.

The Dublin-based pharmaceuticals maker announced in February that it expects a Tennessee state court to issue a default judgment against its subsidiaries regarding opioid-related claims in 13 counties in the state.

Mallinckrodt thinly traded

Mallinckrodt’s 4¾% notes due 2023 slipped about ¼ point to 37¾ bid in thin secondary action on Tuesday, a source said.

The company’s bonds mostly were quiet over the day.

Mallinckrodt’s 5 5/8% notes due 2023 were last seen on Monday down 5 points at 45 bid.

The issuer’s 5½% senior notes due 2025 also were not active on Tuesday after trading ½ point better on Monday at 50½ bid.

The Dublin- and St. Louis-based pharmaceutical company reported in a regulatory filing on Thursday that it plans to obtain a $900 million first-lien secured term loan and a $200 million accounts-receivable-backed revolving credit facility.

Diamond Sports down

Diamond Sports’ 5 3/8% second-lien secured notes due 2026 (Caa3/CCC+) fell 1 point in active trading totaling $5 million on Tuesday, a source said.

The notes were quoted at 38¾ bid.

The Chesapeake, Va.-based sports broadcast group closed on a distressed debt exchange in March that included exchanging 5 3/8% senior secured notes due 2026 for the 5 3/8% second-lien notes.

Talen Energy gains

Talen’s 10½% senior notes due 2026 (C/CC/CCC) went out at 38 bid, up 2 5/8 points, on $15 million of paper traded Tuesday, a source said.

The company’s 6½% senior notes due 2025 (C/CC/CCC) also picked up 1 1/8 points to hit 38 1/8 bid on $7 million of secondary supply during the session.

Talen’s paper and credit default swap spread have been under pressure in April.

S&P Global Ratings and Moody’s Investors Service downgraded the issuer last week.

The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company’s senior notes have recovered from the low 20s in late March following reports the company is in restructuring talks.

Distressed returns higher

The S&P U.S. High Yield Corporate Distressed Bond index one-day total return improved to 0.44% on Monday, compared to minus 0.59% in the same session a week ago.

Month-to-date total returns were lower at minus 1.37% versus minus 1.25% in the week-ago session.

Year-to-date index returns softened to minus 6.61% on Monday, compared to minus 6.5% last week.

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