Distressed paper lifted in light secondary supply; Bausch, Staples gain; FLY Leasing up

By Cristal Cody

Tupelo, Miss., Sept. 9 – Market action buzzed on Friday with the junk primary market waking and following heavy supply in the high-grade space over the week, while a handful of distressed names saw active trading during the session.

Paper from Bausch Health Cos. Inc. and Staples, Inc. was among the busier distressed names and traded mostly better on the day.

Bausch’s 5½% secured notes due 2025 (B3/B/BB-) picked up more than ¼ point on $10 million of secondary action.

Staples’ notes went out more than 1¾ points to 3¾ points better.

The office retailer’s 10¾% senior notes due 2027 (Caa2/CCC+) jumped 3¾ points on $9 million of trading on Friday.

Bonds were lifted over the day in the more active distressed issues as tone remained higher, volatility dropped and stocks climbed, according to market sources.

The S&P 500 index closed up 1.53%, while the Nasdaq added 2.11%.

The iShares iBoxx High Yield Corporate Bond ETF rose 30 cents, or 0.40%, to $75.81.

The CBOE Volatility index was off more than 3% by the close at 22.79.

Oil also improved on Friday.

West Texas Intermediate crude oil benchmark futures for October deliveries settled $3.25 higher at $86.79 a barrel.

Meanwhile, bonds from aircraft leasing company FLY Leasing Ltd. rallied 7 points on Friday on steady trading totaling $5 million after the company announced plans to repurchase up to $50 million of the bonds.

Bausch secured notes up

Bausch’s 5½% secured notes due 2025 (B3/B/BB-) picked up more than ¼ point on $10 million of paper traded on Friday, a source said.

The notes were quoted at the 81 bid area.

The company’s 5% senior notes due 2029 (Caa3/CC/C) clawed back 2 points on $5 million of volume on Friday to head out at 34¾ bid.

Some of Bausch’s paper was down in lighter trading during the session, the source said. The company’s 8½% notes due 2027 (Caa3/CC/C) fell ¾ point to 39½ bid on $4 million of supply.

Bausch launched an Aug. 30 debt restructuring to replace existing senior debt with new first-lien and second-lien secured bonds.

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

Staples bonds gain

Staples’ notes traded more than 1¾ points to 3¾ points better over the day, a source reported.

The 10¾% senior notes due 2027 (Caa2/CCC+) jumped 3¾ points to 78¾ bid on $9 million of secondary volume.

The Framingham, Mass.-based office supply chain’s 7½% senior secured notes due 2026 (B3/B) also were more than 1¾ points higher at 88 bid on $8 million of trading on Friday.

FLY paper jumps

FLY Leasing’s 7% notes due 2024 (Caa2/CC) also saw gains on Friday with the notes up 7 points at 65¼ bid by the day’s wrap, a source said.

Trading totaled $5 million. The notes were yielding more than 30%.

FLY Leasing announced on Friday in a filing with the Bermuda Stock Exchange plans to repurchase up to $50 million of the 7% notes, or 12.8% of the aggregate issue.

The company also announced it entered into an equity line of credit agreement with its indirect parent entity, SASOF International Master Fund V LP, to issue common shares.

FLY Leasing is a global aircraft leasing company acquired by Miami-based Carlyle Aviation Partners in 2021.

Distressed index improves

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Thursday to 0.31% from 0.03% on Wednesday and 0.15% on Tuesday.

Month-to-date total returns climbed to 1.4% versus minus 0.87% on Wednesday and minus 0.9% on Tuesday at the week’s start.

Year-to-date total returns also were improved at minus 21.54% on Thursday versus minus 21.79% on Wednesday and minus 21.81% on Tuesday.

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