Endo stronger on week; Mallinckrodt flat; Navios, PBF dip; Exela ‘finds ceiling’

By Cristal Cody

Tupelo, Miss., July 23 – Bonds mostly quieted on Friday in the distressed space after a volatile week of trading.

Endo International plc was “probably the most traded distressed name” this week, a source said.

Endo’s bonds moderated during the session but headed out about 10 points stronger on the week following the company’s $35 million opioid-related settlement announced on Thursday.

“Endo was up pretty significantly over the course of the week,” the market source said. “The settlement was significantly lower than what people were thinking – at first blush it’s only $35 million versus multiples of billion, so credit responded well to that.”

Bankrupt pharmaceuticals maker Mallinckrodt LLC’s paper ended mostly flat.

Distressed energy bonds softened in light trading but have improved after Monday’s sell-off.

Energy took a beating on Monday “with all the risk assets recovering pretty well” by the end of the week, a source said. “Oil has come back. Some of the distressed names have a heaviness to them, but they’ve rebounded off the lows we saw Monday.”

Transocean Inc.’s notes declined about ½ point over the session.

Navios Maritime Acquisition Corp.’s 8 1/8% first priority ship mortgage notes due Nov. 15, 2021 (Caa1/CCC) fell ¼ point.

PBF Holding Co. LLC’s paper was flat to ¼ point weaker on Friday.

Elsewhere, Exela Technologies, Inc.’s notes finished down about 3¼ points on the week but more than 30 points higher since the end of June.

“Exela’s bonds seem like they finally found a ceiling,” a source said Friday. “The bonds are up 40 points over the last month or so. They’ve found a ceiling in the mid70s.”

Endo dips

Endo International’s bonds moderated on Friday but headed out stronger on the week following the company’s announced $35 million settlement with Tennessee cities and counties.

Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) were quoted down about ½ point at 70 bid.

The issue is up about 10 points week to date.

Endo announced on Thursday that subsidiaries Endo Health Solutions Inc. and Endo Pharmaceuticals Inc. reached the settlement in the Circuit Court for Sullivan County, Tenn.

The Dublin-based pharmaceuticals maker’s settlement followed the announcement on Wednesday of up to a $26 billion settlement between states and Johnson & Johnson and distributors AmerisourceBergen Drug Corp., Cardinal Health Inc. and McKesson Corp. over the opioid epidemic.

On Tuesday, New York attorney general Letitia James announced the state reached a $1.1 billion agreement with the distributors, while its lawsuits against other companies, including Endo Health Solutions, Teva Pharmaceuticals USA, Allergan Finance and Mallinckrodt LLC, were continuing separately.

Mallinckrodt steady

New York’s attorney general reported Tuesday the state’s lawsuit against Mallinckrodt, filed in March 2019, was moving through U.S. Bankruptcy Court.

Mallinckrodt’s 4¾% notes due 2023 were unchanged at 24 bid on Friday, a market source said.

The notes gained about ½ point on Thursday.

The bankrupt pharmaceuticals maker filed a new joint Chapter 11 plan of reorganization and received conditional approval of its disclosure statement on June 16.

A hearing to confirm the plan is scheduled for Sept. 21-22.

The company, based in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

Navios softens

Cayman Islands-based shipping and logistics company Navios Maritime Acquisition’s 8 1/8% first priority ship mortgage notes due Nov. 15, 2021 (Caa1/CCC) edged ¼ point lower to 82 bid in light trading action during the session, a source said.

The issue has softened more than 4 points month to date.

S&P Global Ratings downgraded the issuer in March, citing the company’s refinancing risk on the $603 million outstanding of the 2021 notes and increasing likelihood of a distressed exchange or restructuring.

S&P said in March it viewed Navios’ refinancing options as limited with the company’s access to the bond markets constrained since the notes are trading below par.

PBF notes drop

PBF Holding’s 6% senior notes due 2028 (B3/B+/B+) slipped ¼ point to 49½ bid in heavy trading action on Friday, a source said.

The notes have declined 6¾ points on the week.

The Parsippany, N.J.-based petroleum refiner PBF Energy Inc. subsidiary’s 7¼% senior notes due 2025 (B3/B+/B+) were mostly flat and trading under 58 bid on Friday.

The issue is down 10 points from where the notes ended the prior week.

Transocean weakens

Transocean’s 7½% notes due 2026 (Ca/CCC+) fell about ½ point in light trading activity to 80 bid, a source said.

The notes have improved after sinking 6 points on Monday and 1 7/8 points on Tuesday.

The issue added 1 7/8 points on Wednesday and traded up 1 point on Thursday.

The Vernier, Switzerland-based offshore driller’s notes are about 5 points softer from the prior week.

Oil prices improve

Overall market tone remained better as the week closed with oil prices modestly better on the day and stronger on the week.

The iShares iBoxx High Yield Corporate Bond ETF rose 17 cents to end at $87.95.

Oil prices ended the week higher after plunging on Monday.

North Sea Brent crude oil futures for September deliveries settled up 31 cents to $74.10 a barrel.

In the same session a week ago, brent crude prices settled at $73.59.

West Texas Intermediate crude oil benchmark futures for September deliveries improved 16 cents to settle Friday at $72.07 a barrel.

Benchmark prices ended the prior week at $71.56 a barrel.

The S&P U.S. High Yield Corporate Distressed Bond index closed Thursday softer with minus 0.32% total returns, compared to one-day total returns of 0.46% on Wednesday and 0.82% on Tuesday but improved from minus 1.77% total returns on Monday.

Month-to-date total returns were minus 3.23% on Thursday. Negative month-to-date total returns totaled minus 2.92% on Wednesday, minus 3.37% on Tuesday and minus 4.15% on Monday.

Year-to-date total returns closed Thursday at 23.73%, compared to 24.13% on Wednesday, 23.56% on Tuesday and 22.56% on Monday.

Exela stronger on month

Exela Technologies’ bonds closed the week about 3¼ points softer but remain more than 30 points higher since the end of June, a source reported.

Debt issuer Exela Intermediate LLC’s 10% senior secured first-lien notes due 2023 (Caa3/CCC-) were last seen trading Thursday at 74½ bid.

The bonds ended June in the 43½ bid area and opened the year at 31 bid.

Exela, an Irving, Tex.-based software and services company, announced on June 30 that it completed a $100 million at-the-market equity program and entered into an additional $150 million at-the-market equity program.

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