Bausch distressed notes mixed; AMC bonds perk up; DISH bonds decline; default events up

By Cristal Cody

Tupelo, Miss., July 10 – Distressed debt trading action slowed on Monday with volume light over the session.

Bausch Health Cos. Inc.’s 4 7/8% senior secured notes due 2028 (Caa1/CCC+/B) were the most active U.S. corporate distressed issue seen trading on $8 million of volume, a source said.

The notes gained around ¼ point, while Bausch’s other paper softened in lighter supply.

AMC Entertainment Holdings, Inc. also was active on more than $8 million of trading in two of the company’s bonds.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) added 1 point over the session.

DISH Network Corp.’s bonds trading at the distressed level softened on Monday on more than $10 million of secondary activity.

The 7¾% senior notes due 2026 (B3/B-) fell ½ point on more than $6 million of paper traded.

Stocks were higher on the day.

The S&P 500 index closed up 0.24%.

Volatility edged up. The CBOE Volatility index rose 1.62% to 15.07.

The iShares iBoxx High Yield Corporate Bond ETF added 37 cents, or 0.5%, to $74.22.

Meanwhile, the pace of junk corporate defaults is tracking at 2.2% but is expected to rise, according to a BNP Paribas Securities Corp. note released Monday.

Most high-yield issuers entered “restrictive territory” during the first quarter with interest expense outpacing EBITDA growth and implying a path of fundamental deterioration ahead and from growing volatility with near-term catalysts for default events including $103 billion of maturities due July 2024-July 2026, BNP said.

“Our study of bankruptcy filings for smaller, mostly private companies shows a default cycle is already underway, with the trailing average weekly bankruptcy filings tracking at 60% of the GFC peak,” BNP said. “By sector, health care comprises the largest share of YTD filings, further evidence that default risk so far has been more about rates risk versus economic growth.”

Bausch notes mixed

Bausch’s paper was mixed going out the door on Monday in lighter overall activity totaling over $13 million, a market source said.

The company’s 4 7/8% senior secured notes due 2028 (Caa1/CCC+/B) traded around ¼ point better at 59¼ bid on $8 million of volume.

Bausch’s other bonds slipped on Monday, including the 6 1/8% senior secured notes due 2027 (Caa1/CCC+/B) that fell nearly ½ point to 64¾ bid on $2.7 million of supply.

On Friday, Bausch Health Americas, Inc.’s notes rallied about ¼ point to nearly 3 points on more than $18 million of trading after the company reported a subsidiary entered into a $600 million five-year revolving credit facility with investment firm KKR.

News also broke that subsidiary Bausch + Lomb Corp. made its second acquisition this month with plans to buy Johnson & Johnson’s eye and contact lens drops brand Blink for $106.5 million.

Bausch + Lomb reported a week earlier that it entered into a definitive agreement with Novartis to acquire a non-steroid eye drop and other applications for up to $2.5 billion, including an upfront payment of $1.75 billion in cash.

The Laval, Quebec-based pharmaceutical company’s stock (NYSE: BHC), which rallied 8.45% on Friday, added 4.68% more on Monday to close at $8.73.

AMC extends gains

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) extended Friday’s gains on Monday and added 1 point to head out at 71¾ bid on $6 million of trading, a source said.

The bonds added ½ point on Friday on $7 million of volume.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also were quoted going out Monday at 69 bid on $2.6 million of activity.

The company is awaiting a ruling after a settlement hearing held June 29-30 in the Delaware Court of Chancery to resolve a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over AMC’s issuance of preferred stock.

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) edged up 0.95% on Monday to $4.24.

AMC’s preferred stock (NYSE: APE) also finished the day 2.7% higher at $1.90.

DISH declines

DISH DBS Corp.’s 7¾% senior notes due 2026 (B3/B-) declined ½ point over the session to a quote of 62½ bid on $6.2 million of trading, a source said.

The 7 3/8% senior notes due 2028 (B3/B-) also were quoted at 54 5/8 bid on $4.35 million of volume.

The Englewood, Colo.-based satellite cable operator’s stock (Nasdaq: DISH) closed the day down 2.75% at $7.08.

Distressed returns edge up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved Friday to its highest of the short week at 0.22%, compared to minus 0.62% on Thursday, 0.05% on Wednesday and 0.12% on Monday.

Month-to-date total returns for July were at minus 0.22% on Friday versus minus 0.45% on Thursday.

Year-to-date distressed total returns ended the prior week at 11.38%, up from 11.13% on Thursday but down from 11.82% on Wednesday and 11.76% on Monday.

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