Bausch mostly up in light action; Envision softens; Team Health dips; Rite Aid mixed

By Cristal Cody

Tupelo, Miss., Sept. 2 – Secondary action in the distressed debt market waned on Friday ahead of the long Labor Day weekend, but Bausch Health Cos. Inc.’s paper remained active.

The notes were mixed but mostly recovered about 1 point to 1 3/8 points on more than $14 million of paper traded during the session, according to a market source.

The company’s 5% senior notes due 2029 (Caa3/CC/C) rose 1 3/8 points.

Bausch’s notes dove on Thursday 1½ points to 6½ points on $77 million of secondary volume following the pharmaceutical company’s distressed debt exchange offer and ratings downgrades earlier this week.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Ca/CC) fell ¼ point in thin trading following an upgrade from S&P Global Ratings on Friday.

Team Health Holdings, Inc.’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) traded off about ½ point in thin activity over the day and were ending the week about 1¼ points lower.

Market tone was mostly soft in light activity.

The S&P 500 index closed down 1.07%.

The iShares iBoxx High Yield Corporate Bond ETF slipped 5 cents, or 0.07%, to $74.31.

In other distressed paper, Rite Aid Corp.’s 8% senior secured notes due 2026 (B3/CCC-/BB-) traded about ¼ point better on Friday but were lower on the week.

Rite Aid’s credit default swap spreads also widened more than 50 basis points this week.

Bausch notes up

Bausch’s notes mostly recovered about 1 point to 1 3/8 points in active trading in an otherwise mostly quiet session on Friday, a source said.

The company’s 5% senior notes due 2029 (Caa3/CC/C) rose 1 3/8 points to 37 bid on more than $6.5 million of secondary volume.

Bausch’s 6 1/8% secured notes due 2027 (B3/B/BB-) improved 1 point to 73¼ bid on about $7.86 million of paper traded.

Moody’s Investors Service, S&P and Fitch Ratings said they consider Bausch’s latest debt restructuring to replace existing senior debt with new first-lien and second-lien secured bonds as a distressed exchange.

The Laval, Quebec-based pharmaceutical company plans to spin off Bausch + Lomb.

Envision notes dip

Envision Healthcare’s 8¾% senior notes due 2026 (Ca/CC) fell ¼ point in thin trading to 32¾ bid during the session, a source said.

The bonds saw thin trading activity in August and ended the month mostly flat with a 33 handle.

S&P on Friday raised Envision’s issuer rating to CCC from SD and upgraded the senior note ratings to CC from D after downgrading the company on Tuesday on the company’s second debt restructuring this year.

S&P said Tuesday that it viewed 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 conducted a $2.6 billion distressed exchange in May.

S&P said Friday the two restructurings resulted in reduced debt but increased debt on a consolidated basis.

Team Health softens

Team Health’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) softened about ½ point to the 78½ bid range in light trading supply over the day, a market source said.

The notes were closing out the week about 1¼ points lower but finished August nearly 10 points better on the month.

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

Rite Aid mixed

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/BB-) improved about ¼ point in mostly quiet secondary action on Friday to head out at the 81½ bid area, a source said.

The notes were down about 1¾ points on the week.

Rite Aid’s CDS spreads were softer again over the week.

The Camp Hill, Pa.-based drug retailer’s CDS spreads eased 58 bps to 1,908 bps for the past week ended Wednesday after widening 399 bps in the prior week, according to a Moody’s report.

Distressed index soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns slid on Thursday to minus 1.28% in the first session of September.

One-day returns were minus 0.39% on Wednesday, minus 0.71% on Tuesday and minus 0.9% at the week’s start.

Quarter-to-date total returns were 0.67% on Thursday.

Year-to-date total returns softened to minus 22.11% from minus 21.1% on Wednesday, minus 20.79% on Tuesday and minus 20.23% on Monday.

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