Bausch mostly flat, quiet after exchange; more defaults eyed; QVC up; AT&T soft; CHS drops

By Cristal Cody

Tupelo, Miss., Sept. 28 – Bausch Health Cos. Inc.’s notes mostly quieted Wednesday after the company reported final results of its exchange offers for 11 tranches of senior notes.

Bausch’s 4 7/8% senior secured notes due 2028 (B2/B/BB) were unchanged on the day and down about ½ point on the week.

The year-to-date U.S. high-yield default rate “could soar as high as 1.7% from the current 0.8% level, depending on the final amount of Bausch Health’s distressed debt exchange,” Fitch Ratings said in a report on Monday.

Bausch said Wednesday more than $5 billion of notes had been validly tendered.

“Bausch’s default would represent the largest since Frontier Communications in April 2020,” Fitch senior director Eric Rosenthal said in the report. “A handful of companies could default during 4Q22 and propel the rate to 2%, including Ligado Networks, Diebold Nixdorf, and Cooper-Standard Automotive. Avaya and Bed Bath & Beyond, Inc. are other sizeable issuers we anticipate will default in 2023 or earlier.”

In one of the more active distressed names seen trading Wednesday, the QVC Inc. 4¾% senior secured notes due 2027 (Ba2/BB) rallied 4 points.

Overall distressed secondary activity was fairly thin over the session with volume stronger in higher-rated issues, according to a market source.

The Federal Reserve reported Wednesday in its September corporate bond market distress index that “market functioning continues to be somewhat more strained in the investment-grade segment of the market.”

AT&T Inc.’s 3.55% notes due 2055 (Baa2/BBB) were trading Wednesday with a 65 handle, down from the 102 bid range at the start of the year, a source said.

Tuesday’s weak tone reversed Wednesday with stock indices and the junk space stronger.

The S&P 500 index closed up 1.97%.

The iShares iBoxx High Yield Corporate Bond ETF jumped $1.27, or 1.79%, to $72.40.

Volatility retreated over the session. The CBOE Volatility Index fell 7.42% to 30.18.

November oil prices also were back above $80. West Texas Intermediate crude oil benchmark futures for November deliveries rose $3.65 to settle Wednesday at $82.15 a barrel.

In other active names Wednesday, Community Health Systems Inc.’s 6 7/8% senior secured notes due 2029 (Caa2/CCC) dropped 4 points on about $1 million of secondary action.

The notes slid more than 7 points since Friday.

Bausch paper stable

Bausch’s paper mostly quieted Wednesday in thin trading following the closing of the company’s initial exchange offer for up to $4 billion of new secured notes, a source said.

Bausch’s 4 7/8% senior secured notes due 2028 (B2/B/BB), not included in the offer, were flat at the 66½ bid area by late in the day.

The notes were down about ½ point this week.

Bausch said Wednesday $5.59 billion of notes had been validly tendered in its exchange offers that expired on Tuesday.

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

QVC notes improve

Meanwhile, QVC’s 4¾% senior secured notes due 2027 (Ba2/BB) rallied 4 points Wednesday to just under 78 bid on $2.4 million of secondary activity, a source said.

The 5.45% senior secured note due 2034 (Ba2/BB) also were up about 1¼ points with a 61 handle in thin trading.

QVC is operated by West Chester, Pa.-based media company Qurate Retail Inc., formerly known as Liberty Interactive Corp.

CHS bonds drop

In other active names, CHS/Community Health Systems, Inc.’s 6 7/8% senior secured notes due 2029 (Caa2/CCC/CCC) fell 4 points to a print of 50.38 by the afternoon, a source said.

Trading was light with $1.08 million of reported volume.

The Franklin, Tenn.-based operator of acute care and outpatient facilities’ notes have slid more than 7 points since Friday.

Distressed returns edge down

S&P U.S. High Yield Corporate Distressed Bond index one-day returns edged down to minus 0.6% on Tuesday from minus 0.56% Monday.

Month-to-date total returns were lower at the session close at minus 4.76% versus minus 4.18% on Monday.

Year-to-date total returns also fell to minus 24.85% on Tuesday from minus 24.4% at the start of the week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.