Endo notes sink to teens in heavy secondary action; Mallinckrodt quiet; Telesat gains

By Cristal Cody

Tupelo, Miss., May 6 – Endo International plc’s paper sank about 4¼ points to over 26 points on Friday following the company’s release of a weak first-quarter earnings report and limited financial guidance for the year.

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) slid to a handle in the teens.

Endo’s stock closed down 29.7% to $1.42.

Market volatility pulled back over the session on the heels of a mostly positive April jobs report, though equities continued to sell off a second day following the Federal Reserve’s 50 basis point rate hike on Wednesday.

The Chicago Board Options Exchange’s CBOE Volatility index jumped 23.68% on Thursday and declined over 3% on Friday to 30.19.

The Labor Department announced Friday that total nonfarm payroll employment rose by 428,000 in April, while the unemployment rate was unchanged at 3.6%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 44 cents by the close to $77.59.

The bulk of distressed secondary action was focused on Endo with a few other names seen Friday, according to market sources.

“Distressed is pretty slim pickings,” a source said.

Mallinckrodt plc’s paper was quiet as the company prepares to exit Chapter 11 bankruptcy.

Telesat Corp.’s notes were among the day’s busiest issues with the paper nearly 3 points higher after the company posted strong first-quarter income.

Endo notes skid

Endo’s 6% senior notes due 2028 (Caa3/CCC-) plunged 26½ points on Friday to 17 bid, a source said.

Volume was heavy with $43 million of paper changing hands.

Until Friday, the 6% bonds spent most of the week in the 44 bid range.

Endo’s 9½% senior secured second-lien notes due 2027 (Caa2/CCC-) sank 25¼ points to 34¼ bid by the day’s end on $85 million of secondary supply.

The company’s 7½% senior secured notes due 2027 (B3/B-) saw the strongest action on Friday with $111 million of paper reported trading down 5¼ points to 79¼ bid.

Endo announced Thursday that its first-quarter revenue fell 9% to $652 million.

The company recorded a first-quarter loss of $71.97 million compared to earnings of $41.52 million a year ago.

Endo said that due to uncertainness, the company is only providing financial guidance for the second quarter ending June 30 and projects a loss from continuing operations of 15 cents to 17 cents a share on $500 million to $525 million of revenue.

The Dublin-based pharmaceuticals maker has settled several opioid-related lawsuits this year, including with Alabama, San Francisco and Florida.

Mallinckrodt muted

In other distressed pharmaceutical issues, Mallinckrodt’s 5¾% notes due 2022 were last seen Thursday up 1 point to 51¾ bid in light trading, a source said.

The notes were down ¼ point on the week in thin secondary activity.

The Dublin- and St. Louis-based pharmaceutical company reported in April plans to obtain a $900 million first-lien secured term loan and a $200 million accounts-receivable-backed revolving credit facility as it nears exiting Chapter 11 bankruptcy.

Telesat gains

Telesat Canada LLC’s 6½% senior notes due 2027 (Caa2/CCC+) traded nearly 3 points higher to a print of 45.938 on volume totaling $12 million on Friday, a market source said.

Telesat reported over the day that its first-quarter revenue fell 3% to C$186 million, while net income rose to C$60.63 million from C$41.32 million a year ago.

Telesat president and chief executive officer Dan Goldberg noted in a news release the company “took advantage of the discounted price of Telesat’s senior unsecured notes” during March and April and purchased $60 million of the 6½% issue in the open market.

The company said its board has authorized the purchase of up to $100 million of additional Telesat debt.

The Ottawa-based satellite communications company completed a merger in November between Telesat Canada and Loral Space & Communications Inc.

Distressed returns

S&P U.S. High Yield Corporate Distressed Bond index returns saw improvement on Thursday but remained weak over the first four sessions of May.

One-day total returns were minus 0.27%, compared to minus 0.42% on Wednesday, 0.28% on Tuesday and minus 0.72% on Monday.

Month-to-date total returns declined to minus 1.12% from minus 0.85% on Wednesday, minus 0.44% on Tuesday and minus 0.72% at the week’s start.

Year-to-date index returns dropped to minus 8.92% from minus 8.67% on Wednesday, minus 8.29% on Tuesday and minus 8.55% on Monday.

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