Endo bonds mostly higher; WeWork unchanged; Talen bonds quiet; high-grade notes decline

By Cristal Cody

Tupelo, Miss., June 27 – Endo International plc’s bonds were mixed in thin secondary action Monday after a group of institutional investors announced plans to seek further value in the company.

Endo’s 7½% senior secured notes due 2027 (Caa2/CCC) jumped 1¼ points.

In other distressed paper, WeWork Inc.’s notes were mostly flat and stuck at handles in the 60s and 70s.

WeWork on Monday reported the departure of a director from the board and a new director appointed.

Stocks turned negative over the session, though volatility was marginally lower on the day as the reported default of Russia on its foreign debt took the spotlight in the financial markets.

The iShares iBoxx High Yield Corporate Bond ETF fell 46 cents to $74.58 by the close.

Crude oil was higher.

West Texas Intermediate crude oil benchmark futures for August deliveries settled up $1.95 to $109.57 a barrel.

Talen Energy Supply LLC’s bonds were mostly quiet during the session but ended the prior week about ¾ point to 1½ points higher following news of the bankrupt company’s $1.76 billion debtor-in-possession financing package.

Meanwhile, paper from high-grade companies including Republic Services Inc., Verizon Communications Inc., VMware Inc. and CommonSpirit Health are under pressure and trading at handles in the 70s and low 80s, sources said.

Verizon’s 2.355% senior notes due March 15, 2032 (Baa1/BBB+/A-), issued in September as part of an exchange, traded Monday down ¼ point at 82¼ bid and yielding 4.645%, a source said.

VMware’s 2.2% senior notes due 2031 (Baa3/BBB-/BBB) priced nearly a year ago as part of a $6 billion five-tranche offering were trading at a handle in the high 70s.

The notes were seen Monday afternoon off about ¼ point at the 78½ bid range, a source said.

VMware priced the notes on July 20, 2021 in a $1.5 billion offering at 99.803 to yield 2.222%.

The company is being acquired by Broadcom Inc. in a $61 billion merger expected to close in 2023. The semiconductor manufacturer and software developer will assume $8 billion of VMware’s debt as part of the acquisition.

Endo mixed

Endo’s bonds were mixed in light secondary trading by the afternoon following the investor group release, a source said.

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CC) fell ¼ point to 7½ bid in a handful of trades.

Endo Luxembourg Finance Co. Sarl’s 6 1/8% senior secured first-lien notes due 2029 (Caa2/CCC) were about ¼ point higher at 75½ bid in thin trading.

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured notes due 2027 (Caa2/CCC) jumped 1¼ points to 76 bid in light activity.

The Dublin-based pharmaceuticals manufacturer’s bonds have been under pressure since May on weak first-quarter earnings and a forecasted second-quarter loss.

A group of Endo’s unsecured noteholders on Monday announced they have retained White & Case LLP and GLC Advisors & Co., LLC as legal and financial advisers.

The group said in a release that it has proposed several transactions to Endo, including a cash tender offer or a debt-for-debt exchange.

The investor group also said it has emphasized to the company that a “a near-term bankruptcy filing is unnecessary due to Endo's strong liquidity, significant maturity runway and considerable free cash flow generation.”

WeWork flat

WeWork Cos. LLC’s 5% senior notes due 2025 traded mostly flat at the 66 bid area on Monday, a source said.

WeWork’s 7 7/8% senior notes due 2025 (CCC+/CCC-) were last seen active in the secondary market on Friday unchanged at 74 bid.

The company’s bonds have been under pressure in May and over the back half of June.

The New York City-based flexible office share company began trading on the New York Stock Exchange in October 2021.

Talen mostly quiet

Talen Energy’s 6½% senior notes due 2025 (D/C) fell about ¼ point to the 63¼ bid range on Monday after wrapping the prior week up about 1½ points, a source said.

Talen’s 10½% senior notes due 2026 (C/CC/C) were last seen active on Friday at 64¼ bid, about ¾ point higher on the week.

The DIP financing authorized by the U.S. Bankruptcy Court of the Southern District of Texas on June 17 includes a $1 billion term loan, a $300 million revolving credit facility and a $458 million letter-of-credit facility.

S&P Global Ratings gave the new money portion of the DIP facility a BB+ rating, while Moody’s Investors Service rated the financing package at investment-grade at Baa3.

The Woodlands, Tex. and Allentown, Pa.-based power generation and infrastructure company filed for Chapter 11 bankruptcy in May.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond Index returns improved at the close of last week.

One-day total returns were 0.13% on Friday, negative-0.35% on Thursday, negative-1.11% on Wednesday and 0.28% on Tuesday in the short market week’s first session.

Month-to-date total returns were negative-5.82% on Friday, versus negative-5.94% on Thursday, negative-5.62% on Wednesday and negative-4.56% on Tuesday.

Year-to-date index returns hit negative-19.48% on Friday, compared to negative-19.59% on Thursday, negative-19.31% on Wednesday and negative-18.41% on Tuesday.

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