Bausch Health bonds active; Avaya uptrend continues; At Home notes move lower

By Abigail W. Adams

Portland, Me., June 3 – Several distressed credits were active on a red day for risk assets as investors reassess the Federal Reserve’s rate hike schedule on the heels of a stronger-than-expected U.S. non-farm payrolls report.

CCC credits were again under pressure with recession chatter again driving down risky credits, particularly in the retail space.

Ambience Merger Sub, Inc.’s (At Home Group, Inc.) 7 1/8% senior notes due 2029 (Caa1/CCC+) were down in active trading although there were still buyers for the notes.

Staples Inc.’s 10¾% senior notes due 2027 also fell although in lighter volume.

While the market was weaker on Friday, ETF buying after strong inflows continued, providing support to certain credits.

Bausch Health Cos. Inc.’s junk bonds remained active although with little movement in price.

Avaya Holdings Corp.’s 6 1/8% senior notes due 2028 (B2/B+) continued on their strong uptrend despite the weakness in the market with refinancing chatter alleviating previous concerns about the company’s short-term maturities.

Retail sale

The retail sector was again under pressure on Friday as the market reassess the probability of recession from an aggressive rate hike.

At Home Group’s 7 1/8% senior notes due 2029 fell 1 point to a 67-handle in active trading.

The notes were wrapped around 67½ heading into the market close with a yield of 14.6%.

There was $10 million in reported volume.

While the notes were trading down, there were interested buyers in the market, a source said.

While volume was light, Staples’ 10¾% senior notes due 2027 fell 1½ points to close Friday at 80¾.

The notes were carrying a yield of 16.675%.

Bausch active

Bausch Health’s junk bonds continued to dominate trading in the distressed debt space although with little movement in price.

The 5% notes due 2029 (B3/B-) were largely flat at 61½ with the yield now 14%.

While flat on Friday, the 5% notes have gained more than 2 points on the week.

Bausch’s 5¼% senior notes due 2030 remained wrapped around 61 after rising 3 points over the past week.

The yield on the notes was now 13.6%.

Bausch’s 5% senior notes due 2028 climbed another ½ point to 65 with the yield 14.2%. The notes have gained about 2 points over the past week.

Each tranche saw $12 million in reported volume.

Bausch is a large holding in several high-yield ETFs, a source said.

The notes were posting gains despite a ratings downgrade from earlier in the week.

S&P lowered its ratings on the company’s secured debt to BB- from BB and on their unsecured debt to B- from B, citing an expected decrease in the company’s deleveraging efforts.

Bausch is carrying $23 billion in debt, which is 9x its trailing EBITDA and 6x its forward EBITDA, a source said.

Despite the recent downgrade and heavy debt burden, “some people think it’s going to get better,” a source said.

Avaya uptrend eyed

While a heavy day for the market, Avaya’s 6 1/8% senior notes due 2028 continued their rally as refinancing chatter circulates the market.

The 6 1/8% senior notes added another 3 points to close the day at 80 with a yield of 10½%.

There was $9 million in reported volume.

The 6 1/8% notes have gained almost 8 points on the week and nearly wiped out their post-earnings losses.

The notes tumbled down to a 67-handle in late May after a large earnings miss and lowered guidance which caused some holders to question whether the technology company would be able to pay off its short-term debt.

However, the notes have been on a strong upswing since late May with the recent surge in the notes attributed to refinancing chatter, a source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.