Endo bonds mixed on restructuring reports; Michaels declines; Triumph Group notes slip

By Cristal Cody

Tupelo, Miss., May 18 – Distressed paper stayed under pressure with volatility ramping up and weak earnings reports weighing on financial markets on Wednesday.

Endo International plc’s unsecured paper fell over 3 points, while its secured notes traded flat to over 1 point higher as news reports emerged the company is in restructuring talks, a source said.

The company’s stock tanked 46.54% to close at 62 cents after touching a new low of 36 cents during the session.

Endo’s bonds have been volatile with the company’s 6% senior notes due 2028 (Caa3/CCC-) sinking to the low teens this month after the pharmaceutical manufacturer reported a first-quarter loss and a projected second-quarter loss.

The unsecured notes were trading 1½ points higher than a 10 handle on Wednesday.

Distressed secondary action was lighter during the session as volatility climbed and stock indices finished down across the board with the S&P 500 index off 4.04%, the Dow 30 down 3.57% and the Nasdaq 4.73% lower.

The iShares iBoxx High Yield Corporate Bond ETF dropped 63 cents to $76.00.

The Chicago Board Options Exchange’s CBOE Volatility index jumped over 18% to 30.96.

Oil prices were weaker on the day. West Texas Intermediate crude oil benchmark futures for June deliveries settled down $2.81 at $109.59 a barrel.

Carvana Co.’s paper was among the most active issues seen Wednesday with the online car retailer’s new and existing paper down about 3¾ points to 4 points and yielding about 13% to over 15%, a source said.

Arts and crafts retailer Michaels Cos., Inc.’s 7 7/8% senior notes due 2029 traded down nearly 3½ points to a handle in the 60s by the day’s end.

Triumph Group Inc.’s bonds slid over 6 points after the company posted a fourth-quarter loss during the session.

Endo bonds mixed

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured notes due 2027 (B3/B-) added 1 1/8 points to trade at 78 1/8 bid by the close on $21 million of volume, a source said.

Endo Luxembourg Finance Co. Sarl’s 6 1/8% senior secured first-lien notes due 2029 (B3/B-) went out Wednesday flat at 75 bid on $19 million of paper changing hands.

Meanwhile, Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC-) dropped 3¼ points over the day to 11½ bid.

Endo’s paper plunged earlier in the month after the company reported first-quarter losses and gave limited financial guidance with a projected second-quarter loss.

The Dublin-based pharmaceuticals maker has settled several opioid-related lawsuits in 2021 and year to date, including with Alabama, San Francisco and Florida.

Michaels paper lower

Michaels’ 7 7/8% senior notes due 2029 (B3/CCC+) dropped nearly 3½ points on Wednesday to 67¼ bid, a market source reported.

The issue saw $12 million of secondary volume.

The Irving, Tex.-based arts and crafts retailer was taken private in 2021 by funds managed by Apollo Global Management, Inc. affiliates.

Triumph notes slip

Also Wednesday, Triumph Group’s 7¾% senior notes due 2025 (Caa3/CCC-) dropped 6 3/8 points to 84 bid in a busy session that saw $21 million of paper traded, a source said.

The company’s stock finished down over 18% at $17.90.

During the session, Triumph Group reported a loss of $10.6 million in the fourth quarter ended March 31 and a loss of $42.8 million for fiscal 2022.

The Berwyn, Pa.-based aerospace and defense system manufacturer and engineer gave fiscal 2023 earnings guidance of 40 cents to 60 cents a share.

Distressed returns

The S&P U.S. High Yield Corporate Distressed Bond index turned positive on Tuesday.

One-day total returns rose to 0.23% from minus 0.13% on Monday.

Month-to-date total returns improved to minus 7.82% from minus 8.04% at the week’s start.

Year-to-date index returns also were improved at minus 15.09% versus minus 15.29% on Monday.

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