Staples notes drop in strong volume; Mallinckrodt lower; Bausch Health flat; Carvana up

By Cristal Cody

Tupelo, Miss., June 16 – Staples Inc.’s paper was pressured on Friday in heavy secondary supply with the issuer among the most active junk and distressed names on more than $30 million of trading.

The 10¾% senior notes due 2027 (Caa2/CCC+) were more than 1 point lower.

Mallinckrodt plc’s 10% second-lien notes due 2025 (Caa1/CCC+) declined 1 point in thin trading after the company skipped paying the interest payments on two of its bonds in the prior session.

The notes have shed about 10 points since the start of the week.

Secondary action stayed busy on Friday ahead of the holiday weekend, sources reported.

Market tone softened with stocks lower, though volatility receded.

The S&P 500 index fell 0.37%.

The iShares iBoxx High Yield Corporate Bond ETF dropped 19 cents, or 0.25%, to $74.93.

The CBOE Volatility index declined 6.62% to 13.54.

Bausch Health Cos. Inc.’s notes were fairly active on more than $4 million of paper changing hands on Friday with the bonds flat over the session.

Carvana Co.’s 10¼% senior notes due 2030 (Ca/CCC-) rallied 8 points this week in one of the most active distressed issues.

“Within the distressed, two-thirds of all gains this week were driven by just five names: Carvana, Altice, Community, Rackspace and Lumen,” according to a BofA Securities research note on Friday.

In the CCC space, 70% of all gains were driven by the distressed segment this week, BofA said.

Staples lower

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) declined 1½ points to 62¼ bid on $13.8 million of secondary volume, a source said Friday.

The notes were yielding over 27%.

Staples’ 7½% senior secured notes due 2026 (B3/B) also fell 1½ points to an 82 bid handle and a yield of more than 15% in heavier trading totaling $21 million.

The company’s credit default swap spreads tightened this week by 93 basis points to 2,286 bps for the period ended Wednesday, according to a report from Moody’s Investors Service.

Staples is a Framingham, Mass.-based office products retail company owned by private equity firm Sycamore Partners.

Mallinckrodt softens

Mallinckrodt’s 10% second-lien notes due 2025 (Caa1/CCC+) were quoted down 1 point on Friday at 14 bid in thin trading totaling $1 million, a source said.

The notes were seen Thursday at 14 bid, 16 offered, compared to 25 bid, 27 offered at the start of the week.

The issue traded with a 78 handle on June 5.

Mallinckrodt said Thursday in a regulatory filing that the board elected not to pay the interest payments due on its 10% second-lien note due 2025 and 11½% first-lien senior secured note due 2028 but did make the required $16.5 million payment due in the prior session as part of its opioid-related settlement reached with federal authorities last year.

The company reported that it is considering options, including bankruptcy.

The Dublin-based pharmaceutical company exited Chapter 11 bankruptcy on June 16, 2022.

Bausch notes steady

Bausch Health Americas, Inc.’s 8½% senior secured notes due 2027 (Caa1/CCC+/B) stayed active in distressed trading on Friday but were unchanged at 54½ bid, a market source said.

The issue saw $4.2 million of volume.

The Laval, Quebec-based pharmaceutical company’s stock closed down 9 cents, or 1.21%, to $7.35.

Carvana higher

Carvana’s 10¼% senior notes due 2030 (Ca/CCC-) climbed 8 points this week to a 78 handle on $38 million of secondary trading, BofA analysts said in a note on Friday.

Back in March, the notes were trading around 52 bid.

The bonds have improved since the company reported earlier in June that it expects higher adjusted EBITDA of above $50 million in the second quarter.

Also this month, Carvana terminated an exchange offer for five series of notes after the minimum participation condition of $500 million of tendered notes was not met.

The Tempe, Ariz.-based online car retailer’s stock (NYSE: CVNA) slipped 4.02% to close Friday at $25.32.

Distressed returns down

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined on Thursday to 0.01% from 0.47% on Wednesday, 0.6% on Tuesday and 0.28% on Monday.

Month-to-date total returns edged up to 4.62%, compared to 4.61% midweek, 4.12% on Tuesday and 3½% at the start of the week.

Year-to-date total returns improved on Thursday to 11.57% from 11.56% on Wednesday, 11.04% on Tuesday and 10.37% on Monday.

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