Endo bonds rally; Rite Aid notes climb; energy paper trades higher as oil prices advance

By Cristal Cody

Tupelo, Miss., July 7 – Paper from distressed pharmaceutical maker Endo International plc climbed in heavy secondary market action on Thursday.

The company’s 6% senior notes due 2028 (Caa3/C) on which the company missed a $38 million interest payment in the prior week rose 1½ points on Thursday.

Endo’s secured notes were trading about ¾ point to 1¾ points better on the day.

Risk-on tone grew on Thursday as issuers ventured into the primary markets, stocks rallied and volatility waned.

The iShares iBoxx High Yield Corporate Bond ETF improved 1.63% to $74.83.

Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) also went out 1½ points better in strong secondary supply over the day.

Energy bonds saw some relief on Thursday as oil prices advanced with bonds trading about ¾ point to over 1 point better, a source said.

Distressed offshore driller Transocean Inc.’s bonds rose about 2 points during the session.

West Texas Intermediate crude oil benchmark futures for August deliveries settled $4.20 higher on Thursday at $102.73 a barrel.

Endo moves higher

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/C) jumped 1½ points to 9½ bid in strong trading activity on Thursday, a market source said.

The bonds had been stuck at the 8 bid area over the last few sessions after skidding last week on the missed $38 million interest payment.

The company has a 30-day grace period before a default is declared.

Endo also was notified in the past week that it was out of compliance with the Nasdaq Stock Market’s minimum bid requirements since its stock traded below $1 per share.

The Dublin-based pharmaceuticals maker has settled several opioid-related lawsuits in 2021 and 2022 with states, cities and counties, including Alabama, San Francisco and Florida.

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured notes due 2027 (Caa2/CC) rose ¾ point by the day’s close to 76 bid.

Endo Luxembourg Finance Co. Sarl’s 6 1/8% senior secured first-lien notes due 2029 (Caa2/CC) also headed out 1¾ points higher at 76¾ bid.

Rite Aid improves

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) were trading 1½ points better at 79 bid, a market source said.

Secondary action was fairly busy in the issue over the session.

The notes were left out of a tender offer Rite Aid completed in June after the company chose not to accept any of the paper tendered.

Rite Aid reported it completed below-par cash tender offers for up to $150 million of its 7½% senior secured notes due 2025, 6 7/8% debentures due 2028 and 7.7% senior debentures due 2027 but declined to accept any of the 8% paper.

Fitch Ratings revised the outlook for the Camp Hill, Pa.-based drug retailer on Wednesday to negative from stable.

Transocean rises

Transocean’s 8% debentures due 2027 (Ca/CCC+) rose nearly 2 points to 66 bid on Thursday, a market source said.

The Vernier, Switzerland-based offshore driller’s 6.8% senior notes due 2038 (C/CCC) also traded more than 2 points better at 52 bid.

Distressed returns moderate

The S&P U.S. High Yield Corporate Distressed Bond index saw some improvement on Wednesday with one-day total returns at minus 0.11% versus minus 0.95% on Tuesday.

Month-to-date total returns softened Wednesday to minus 1.44% from minus 1.34% in the short week’s first session.

Year-to-date total returns eased to minus 23.74% from minus 23.66% on Tuesday.

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