Distressed pharmaceutical paper mixed; Bausch notes skid; Endo improves; Revlon higher

By Cristal Cody

Tupelo, Miss., Aug. 24 – Bausch Health Cos. Inc.’s notes slid about 1¼ points to more than 6 points on Wednesday with the paper dominating distressed secondary volume over the session.

Nearly $50 million of the company’s notes were traded lower.

Bausch reported Monday progress on its plan to separate Bausch + Lomb, including that it retained legal and financial advisers to evaluate strategic alternatives.

Also in the distressed pharmaceutical space, Endo International plc’s paper has been moving higher since the company’s Chapter 11 bankruptcy last week.

Endo’s 7½% senior secured first-lien notes due 2027 (Caa2/D) climbed over 1 point on Wednesday.

The broader markets shrugged off weakness in the prior two sessions with stocks turning positive and measured volatility receding on Wednesday. The S&P 500 index rose 0.29%.

The iShares iBoxx High Yield Corporate Bond ETF edged up 9 cents, or 0.12%, to $76.36.

The CBOE Volatility index fell 5.14% to 22.87 by the end of the session.

Overall distressed volume has been light this week due to late-summer vacations that are expected through the Labor Day holiday, according to market sources.

In other bankrupt paper, Revlon Inc.’s notes improved about 1¾ points in light trading.

Bausch notes slide

Bausch Health’s notes fell about 1¼ points to more than 6 points over the day, a source said.

The 9% senior notes due 2025 (Caa2/CCC/B-) were quoted down more than 6¾ points with a 63 handle on $10 million of trading activity.

The company’s 5¼% notes due 2030 (Caa2/CCC/B-) fell 3½ points to 41 bid on $2 million of volume on Wednesday.

Bausch’s 4 7/8% senior secured notes due 2028 (B2/B/BB) also traded off 1½ points at 72¾ bid on $6 million of secondary supply.

In addition, the Laval, Quebec-based pharmaceutical company’s 5% senior notes due 2028 (Caa2/CCC/B) fell 1¼ points to 46 bid by the end of the day. Trading volume totaled $3 million.

Bankrupt Endo higher

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured first-lien notes due 2027 (Caa2/D) climbed over 1 point to around 89 bid on Wednesday on $12 million of secondary activity, a source said.

Endo’s Chapter 11 bankruptcy filing in the prior week triggered an event of default on its debt.

The Dublin-based pharmaceuticals company entered into a restructuring agreement with stalking horse bidder Ad Hoc First Lien Group, which is made up of certain creditors holding more than 50% of its outstanding secured debt.

Revlon improves

In other bankrupt names, Revlon Consumer Products Corp.’s 6¼% senior notes due 2024 (C/D) traded about 1¾ points higher on Wednesday at the 12 bid area, a source said.

The notes were up about 2 points so far this week.

The New York-based cosmetics manufacturer filed for Chapter 11 bankruptcy in June.

Distressed returns soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns remained soft but were improved on Tuesday.

One-day returns rose to minus 0.45% from minus 0.93% on Monday.

Month-to-date total returns were lower at 1.7% versus 2.16% at the week’s start.

Year-to-date total returns widened to minus 19.32% on Tuesday from minus 18.96% on Monday.

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