Endo notes trade higher; Qurate Retail, QVC paper perks up; global defaults rise

By Cristal Cody

Tupelo, Miss., Aug. 10 – Endo International plc’s secured and unsecured notes continued to trade higher on Wednesday as the pharmaceutical manufacturer navigates potentially filing for Chapter 11 bankruptcy.

The notes were up about ¼ point to over 1 point on Wednesday following gains on Tuesday after Endo reported heavy second-quarter losses and that it may file for Chapter 11 imminently.

In other distressed paper, Qurate Retail Inc.’s 8½% senior debentures due 2029 (B2/B) traded about ¾ point higher on Wednesday, while paper from the home shopping network owner’s subsidiary, QVC Inc., was better on the week.

Stocks climbed and market volatility sank nearly 10% on Wednesday as July inflation data came in better than anticipated.

The Labor Department said the Consumer Price Index rose 8½% over the last 12 months, below market forecasts of an 8.7% increase.

In June, the CPI reflected a 9.1% year-over-year gain.

The S&P 500 index rose 2.13% on the day.

The iShares iBoxx High Yield Corporate Bond ETF jumped $1.16, or 1.5%, to $78.69.

The CBOE Volatility index fell 9.46% to below a 20 handle at 19.71.

Global corporate defaults total 43 after five companies defaulted in July, including Texas-based SK HoldCo LLC, according to a S&P Global Ratings news release.

Year-to-date default volume remains down from 54 defaults seen in the same period last year and 72 posted in the 2020 period.

U.S. defaults were nearly 33% lower than previous year-to-date levels, while emerging market defaults have soared 70% through July, S&P said.

Homebuilders and real estate contributed the highest number of defaults year to date, led by China-based issuers, according to the report.

More than a dozen defaults were registered in 2021 from China-based real estate developers.

On Sunday, distressed property developer Logan Group Co. Ltd. reported it will not make the interest payments on several dollar bonds.

Logan’s notes were quiet on Wednesday after mostly softening at the start of the week.

Endo remains up

Endo’s bonds continued to improve in distressed secondary trading on Wednesday after the company posted weak second-quarter earnings and announced a potential Chapter 11 bankruptcy filing, a market source said.

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured first-lien notes due 2027 (Caa2/CC) added 1 point to trade at 83½ bid.

The notes picked up 1¼ points on Tuesday.

Endo Finance LLC’s 6% senior notes due 2028 (C/C) were marginally better at 6 3/8 bid, up from 6 1/8 bid on Tuesday. The issue was 5/8 point better the previous day.

Endo Luxembourg Finance Co. Sarl’s 6 1/8% senior secured first-lien notes due 2029 (Caa2/CC) also traded 1½ points better at 83½ bid after finishing the prior day up 1 point.

Endo announced Tuesday a second-quarter loss of $1.89 billion, compared to a loss of $15.5 million last year.

The company may default after missing interest payments on several notes.

A 30-day grace period expires on Monday in connection with Endo’s missed $1.9 million payment due July 15 on its 5 3/8% senior notes due 2023.

The Dublin-based pharmaceuticals company also faces thousands of opioid-related lawsuits.

Qurate, QVC improves

The 8½% senior debentures due 2029 (B2/B) from Qurate Retail, formerly known as Liberty Interactive Corp., rose ¾ point to 77 bid in steady trading over the session, a source said.

The notes were trading 2 points better this week but remain down from the 91 bid range in April.

Subsidiary QVC’s 5.45% senior secured notes due 2034 (Ba2/BB+) were thinly traded on Wednesday under the 74 bid range, about ½ point better since last week.

The West Chester, Pa.-based media company, formerly known as Liberty Interactive Corp., on Friday reported lower revenue and slightly better losses in the second quarter.

Logan offshore bonds quiet

Logan Group’s dollar notes remained on the sidelines in secondary trading on Wednesday, a source said.

The 6½% senior notes due 2023 last traded Tuesday at 11 bid, up 2½ points from the prior week.

Logan’s 4.7% senior notes due 2026 (Caa3) were last seen active on Monday at 9 bid.

The bonds started the year at the 91 bid area.

The Shenzhen, China-based property developer reported Sunday that it will suspend interest payments on its dollar-denominated bonds, including the 4.7% notes due 2026, 6½% senior notes due 2023, 4¼% senior notes due 2025, 4½% senior notes due 2028 and 5¾% senior notes due 2025.

Distressed returns drop

S&P U.S. High Yield Corporate Distressed Bond index total returns turned negative on Tuesday.

One-day returns softened to minus 0.18% from 0.79% on Monday.

Month-to-date total returns fell to 1.92% from 2.1% at the start of the week.

Year-to-date total returns edged down to minus 19.15% on Tuesday from minus 19% on Monday.

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