Frontier notes falls on new offering; Endo losses mount; Party City down double digits

By Abigail W. Adams

Portland, Me., May 9 – Several corporate bond issues fell further into distressed territory on Monday as selling in risk assets intensified as the market prices an aggressive path forward by the Federal Reserve.

Weak earnings have further compounded pressure on weak credits, which have been particularly hard hit in the downturn in the market as recession concerns fuel selling activity.

Party City Holdings Inc.’s 8¾% senior secured notes due 2026 (B3/B) led losses in the secondary space with the notes falling double digits after earnings.

Endo International plc’s senior notes continued to fall in heavy volume after tanking on Friday following earnings.

Frontier Communications Corp.’s senior notes were also taking a hit in active trading as the telecommunications company prepped a new offering.

Party over

Party City’s 8¾% senior secured notes due 2026 sank double digits in active trading after the party goods retailer announced disappointing earnings.

The 8¾% senior notes sank 10 7/8 points outright and were wrapped around 75 7/8 heading into the market close, according to a market source.

The yield on the notes jumped 446 basis points to 17.831%.

The notes dominated activity in the secondary space with $74 million in reported volume.

Party City’s capital structure was under pressure after reporting a wider loss than anticipated.

The retailer reported a net loss of $26 million versus a net loss of $14 million at the end of the previous quarter.

EBITDA also decreased dramatically with adjusted EBITDA of $4.6 million versus adjusted EBITDA of $32 million the previous quarter.

The results mirror a broader trend in the retail sector, which has been hard hit by earnings, a source said.

Endo losses eyed

Endo’s senior notes continued to decline in active trading following last Friday’s fire sale.

The pharmaceutical company’s secured paper remained the most active in the capital structure.

Endo’s 7½% senior secured notes due 2027 (B3/B-) sank another 2¼ points to close Monday at 77 with a yield of 14.173%, according to a market source.

The 6 1/8% senior secured notes due 2029 (B3/B-) fell another 1 point to 76 with the yield 11.2%.

Both tranches saw $22 million in reported volume during Monday’s session.

The 7½% notes have fallen about 8 points and the 6 1/8% notes have fallen 5½ points since Friday after the company reported a larger loss than expected and weak guidance for the current quarter.

Frontier down

Frontier’s senior notes were taking a hit in active trading with weak market conditions and a new offering driving down the company’s capital structure.

Frontier’s 6% senior notes due 2030 (Caa2/CCC+) sank 6½ points to close Monday at 80½, according to a market source.

There was $16 million in reported volume.

The notes were now yielding 9.646%.

The 5 7/8% first-lien senior secured notes due 2027 (B3/B+) were down 2¼ points to 91½. However, volume was light with only one round-lot trade, a source said.

Frontier announced a new offering of eight-year first-lien secured notes (B3//BB+) on Monday, which was expected to price as a drive-by with initial talk for a yield in the 9% area.

The telecom’s unsecured notes of similar duration were taking a hit on the new offering with the paper getting “primed over” or pushed further down in the capital structure, a source said.

Frontier’s shorter duration secured notes were lower but holding up relatively well.

Frontier priced a $1 billion issue of the 6% notes at par in October 2021 in its first pass at the high-yield market since emerging from bankruptcy in 2020.

© 2015 Prospect News.
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