Bausch notes continue decline; Envision lower; Team Health, Talen paper up in August

By Cristal Cody

Tupelo, Miss., Aug. 30 – Bausch Health Cos. Inc.’s notes saw further declines on Tuesday after giving back about ¼ point to 3¼ points on Monday and about 8¾ points to more than 10 points last week.

The company’s 5% senior notes due 2028 (Caa2/CCC/B-) were quoted down 1¼ points on the day and 5 points lower since Friday.

The health care space has seen weakness in August from several issuers, including a Chapter 11 bankruptcy announcement from Carestream Health Inc. and another debt restructuring from Envision Healthcare Corp.

Envision Healthcare’s 8¾% senior notes due 2026 (Ca/D) softened about ½ point on Tuesday after S&P Global Ratings downgraded the issuer to selective default from CCC following the company’s second debt restructuring.

Team Health Holdings, Inc.’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) fell about ¼ point in light trading over the day but were nearing the end of the month nearly 10 points higher.

Overall market tone remained weak on Tuesday with stocks down and distressed secondary trading light ahead of the upcoming Labor Day holiday.

The iShares iBoxx High Yield Corporate Bond ETF declined 58 cents, or 0.77%, to $74.94.

Measured market volatility was flat with the CBOE Volatility index steady at 26.21.

Oil prices slid during the session. West Texas Intermediate crude oil benchmark futures for October deliveries settled down $5.37 at $91.64 a barrel.

In other distressed paper, Talen Energy Supply LLC’s paper softened after the bankrupt company reported a go-shop process, though the notes have been mostly on the mend since the company filed for Chapter 11 bankruptcy back in May.

The 7% senior notes due 2027 fell about 2¾ points after Talen announced Tuesday the go-shop process to solicit bids for the sale of the energy company.

Talen’s 7% notes have gained more than 12 points since the start of August.

Bausch drops more

Bausch Health’s paper continued to weaken after declining about ¼ point to 3¼ points on Monday, sources reported.

The company’s 5% senior notes due 2028 (Caa2/CCC/B-) were quoted at 39½ bid, down 1¼ points on the day and 5 points off since Friday.

The Laval, Quebec-based pharmaceutical company plans to spin off Bausch + Lomb and has retained legal and financial advisers to evaluate strategic alternatives.

Envision notes down

Envision Healthcare’s 8¾% senior notes due 2026 (Ca/D) softened about ½ point to 32½ bid in thin trading on Tuesday, a source said.

The bonds, little traded in August, have softened about 1 point since July.

S&P said Tuesday that it views Envision’s second major restructuring on Aug. 5 as tantamount to a default. The company closed on a new money first-out term loan, new second-out term loan a new third-out term loan.

The Nashville-based health care company and hospital-based physician group’s notes were dropped to D in May after Envision conducted a $2.6 billion distressed exchange with proceeds used to repurchase part of its outstanding term loans and notes at below par.

Team Health off on day

Team Health’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) were quoted down about ¼ point at the 78½ bid range in mostly quiet trading action on Tuesday, a market source said.

The notes have been thinly traded over the month but were nearly 10 points better since ending July with a 69 handle.

The Knoxville, Tenn.-based medical staffing firm is owned by Blackstone Group LP.

Talen softens

Talen’s 7% senior notes due 2027 fell about 2¾ points by the end of the session to the 84¼ bid area, a source said.

The notes, which hit a low in April with a 21 handle, have improved further in August since ending July at 72 bid.

Talen announced Tuesday that it started a go-shop process on Monday to solicit bids and consider proposals for the sale of the company.

Talen said the process follows approval of the company’s upsized $1.55 billion equity backstop commitment letter by the U.S. Bankruptcy Court of the Southern District of Texas.

The Woodlands, Tex., and Allentown, Pa.-based power generation and infrastructure company filed for Chapter 11 bankruptcy in May and plans to complete its plan of reorganization by the end of the year.

Distressed returns lower

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined on Monday to minus 0.9% from minus 0.33% on Friday but were up from minus 0.93% in the same day a week ago.

Month-to-date total returns softened to 0.55% on Monday from 1.47% ahead of the weekend and 2.16% in the week-ago session.

Year-to-date total returns fell to minus 20.23% on Monday versus minus 19.5% on Friday and minus 18.96% in the Aug. 22 session.

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