Revlon notes higher; Endo improves; PBF declines; high-grade paper under pressure

By Cristal Cody

Tupelo, Miss., June 17 – Revlon Inc.’s notes turned higher on Friday in light trading following the company’s announcement on Thursday that it filed for Chapter 11 bankruptcy.

Revlon’s 6¼% senior notes due 2024 (C/D) rose 1½ points.

Endo International plc’s paper was among the most active distressed issues over the session.

The pharmaceutical maker’s 7½% senior secured notes due 2027 (Caa2/CCC) picked up ½ point on $12 million of paper changing hands, a source said.

Endo’s 6% senior notes due 2028 (C/CC) headed out up ½ point with a 7 handle.

“This has a been a free-fall,” a source noted this week. “These opened the year at right around 74, 75. The first liens have held in pretty well compared to these.”

Market tone was mixed heading into the long holiday weekend. The U.S. fixed income markets will be closed on Monday for the Juneteenth holiday.

The Chicago Board Options Exchange’s CBOE Volatility index fell 6% to 30.97 by the close.

Stocks saw some recovery after tanking on Thursday in the wake of weak economic data this month and the Federal Reserve’s largest rate hike since 1994 on Wednesday.

The S&P 500 index edged up 0.22% after closing Thursday down 3¼%.

The iShares iBoxx High Yield Corporate Bond ETF rose 0.51% to $74.20.

Energy bonds felt some pain on Friday after oil prices nose-dived.

West Texas Intermediate crude oil benchmark futures for July deliveries settled $8.03 lower at $109.56 a barrel.

Petroleum refiner PBF Energy Inc.’s senior notes softened over 1½ points.

Meanwhile, bonds from high-grade names including Apple Inc., Google Inc., Amazon.com Inc., Microsoft Corp., Berkshire Hathaway Energy Co., JPMorgan Chase & Co., Merck & Co. and Verizon Communications Inc. are facing pressure in the secondary market.

Over $300 billion liquid investment-grade bonds “are trading at dollar prices below 75 pts right now,” according to a BofA Securities Inc. research note on Friday.

“These are the companies with hundreds of billions of dollars of cash, who are staring at their bonds trading at essentially distressed levels,” the analysts said.

While some of the companies’ bonds are trading with handles in the 60s and 70s, the yields are well below the 10% area, a source noted.

Amazon.com’s 2.7% senior notes due 2060 (A1/AA) were quoted with a 68 handle and a 4.46% yield on Friday.

Berkshire Hathaway’s 2.85% notes due 2051 (A3/A-) were moving with a 71 handle and a 4.6% yield, a source said.

Apple’s 1.25% notes due 2030 (Aaa/AA+) were trading at 81 bid on Friday but with a yield at just under 4%.

Revlon moves up

Looking at bankrupt paper, Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 (C/D) traded 1½ points higher on Friday at 6¼ bid on $2 million of volume, a source said.

The bonds went out Thursday down about ¾ point on nearly $13 million of volume.

The New York-based cosmetics manufacturer reported that it filed for Chapter 11 on Wednesday in the U.S. Bankruptcy Court for the Southern District of New York.

Endo improves

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured notes due 2027 (Caa2/CCC) picked up ½ point on $12 million of paper changing hands on Friday, a source said.

The bonds were quoted late afternoon at 74½ bid.

Endo Finance LLC’s 6% senior notes due 2028 (C/CC) headed out at 7¼ bid, up ½ point on the day and closing the week about 1¾ points higher.

The Dublin-based pharmaceuticals manufacturer’s bonds have been under pressure since May after the company reported a first-quarter loss and forecasted a second-quarter loss.

PBF bonds soften

PBF Holding Co. LLC’s 6% senior notes due 2028 (Caa1/B+/BB-) were quoted down over 1¾ points on Friday at 86¾ bid, a source said.

Volume was steady on $4 million of paper traded.

Fitch Ratings upgraded the bonds on Tuesday.

The Parsippany, N.J.-based petroleum refiner’s stock gave back over 6% by the day’s end.

Distressed returns slip

The S&P U.S. High Yield Corporate Distressed Bond index declined over Thursday’s session.

One-day total returns dropped to minus 1.49%, compared to 0.69% on Wednesday, minus 0.51% on Tuesday and minus 2.37% on Monday.

Month-to-date total returns fell to minus 4.98% from minus 3.54% on Wednesday, minus 4.2% on Tuesday and minus 3.71% at the start of the week.

Year-to-date index returns declined to minus 18.77% from minus 17.54% midweek, minus 18.11% on Tuesday and minus 17.69% on Monday.

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