Emergent BioSolutions, CHS rally; Coinbase up; Avaya, Lumen, Rite Aid decline; Adani up

By Cristal Cody

Tupelo, Miss., Feb. 16 – Emergent BioSolutions Inc.’s bonds soared nearly 10 points in heavy secondary trading on Thursday following the company’s report of two major developments.

Emergent BioSolutions’ 3 7/8% guaranteed senior notes due 2028 (Caa1/B) were trading at nearly double the price at which the notes were trading during the week before Christmas.

CHS/Community Health Systems, Inc.’s bonds rallied as much as 7¼ points in the post-earnings release session on Thursday.

Coinbase Global, Inc.’s 3 5/8% notes due 2031 (B1/BB-) improved 2¼ points in strong trading action that rose to more than $12 million.

Stocks sank over the day. The S&P 500 index was down 1.38%.

The iShares iBoxx High Yield Corporate Bond ETF fell 60 cents to $74.27.

The CBOE Volatility index climbed 10.7% by the close to $20.18.

S&P Global Ratings said Thursday that it expects the U.S. trailing-12-month speculative-grade corporate default rate to reach 4% by December, up from 1.7% in December 2022.

“Since the last forecast update, U.S. GDP increased more than many expected in the fourth quarter, and both the headline Consumer Price Index and Producer Price Index continued to decline,” S&P said. “But aggregate corporate earnings appear to be contracting, based on results so far, and many banks are prepping for a recession.”

In other distressed market activity, Avaya Holdings Corp.’s paper continued to soften as the company moves forward in a restructuring.

Avaya’s 6 1/8% senior secured notes due 2028 (Caa2/CCC-/CCC), which fell 3 points on Wednesday, declined ½ point on Thursday.

Lumen Technologies, Inc. also was a name that saw heavy trading over the day.

The company’s 4½% notes due 2029 (B2/B+) declined 1 point on more than $15 million of volume.

Lumen’s credit default swap spreads widened more than 80 basis points this week.

Rite Aid Corp.’s bonds and CDS spreads remained under pressure.

The pharmacy chain’s 8% senior secured notes due 2026 (B3/CCC-/CCC) traded in the low 50s on Thursday, while its CDS spreads were approaching 5,000 bps.

Meanwhile, Adani Group, Adani Green Energy Ltd. and Adani Transmission Ltd. conducted fixed income investor calls on Thursday that will continue on Friday, a source said.

Adani Green Energy's calls were scheduled for Thursday only, according to a regulatory filing.

The investor calls follow Adani’s release on Tuesday of its financial results for the fiscal 2023 third quarter and nine months ended Dec. 31.

On Thursday, Adani Enterprises Ltd. said in a regulatory filing that it wanted to clarify that a news report that it hired accounting firm Grant Thornton LLP “appears to be a market rumor.”

Adani has been battling declines in its dollar bonds since it was accused of fraud in January by Hindenburg Research.

The company’s bonds shed around 30 points from trading at the mid-90s before the report to as low as a 60s handle at the start of February.

Adani Green Energy’s bonds improved on Thursday, while its CDS spreads also tightened 55 bps this week.

Emergent BioSolutions up

Emergent BioSolutions’ 3 7/8% guaranteed senior notes due 2028 (Caa1/B) climbed 9¾ points in one of the day’s most active issues, a source said.

The bonds were quoted at 65¼ bid on more than $15 million of trading.

The issue traded the week before Christmas at 39 bid.

Emergent BioSolutions reported two major developments on Wednesday.

The company said that its Narcan nasal spray used to reverse drug overdoses received unanimous support for non-prescription status from a U.S. Food and Drug Administration advisory committee. The drug still requires full approval from the FDA.

The Gaithersburg, Md.-based life sciences company also announced Wednesday that it entered into an agreement to sell its travel health business to Bavarian Nordic for a value up to $380 million.

CHS paper climbs

CHS/Community Health’s bonds mostly saw strong gains on Thursday following the company’s earnings release, according to a market source.

The 4¾% notes due 2031 (B2/B) went out under ¼ point higher on a 79 bid handle in heavy trading that topped $33 million.

The 6 1/8% senior secured notes due 2030 (Caa2/CCC) jumped 7¼ points to 67¼ bid. Trading was on the light side at $3 million.

The Franklin, Tenn.-based operator of acute care and outpatient facilities posted its fourth-quarter and fiscal 2022 earnings report on Wednesday.

Coinbase improves

Coinbase’s 3 5/8% notes due 2031 (B1/BB-) added 2¼ points on Thursday in strong trading action that totaled $12.3 million, a market source said.

The bonds went out at 60½ bid.

S&P and Moody’s downgraded the Wilmington, Del.-based cryptocurrency exchange platform in January with heightened regulatory hurdles anticipated following cryptocurrency exchange FTX’s bankruptcy in November.

Avaya moves lower

Avaya Inc.’s 6 1/8% senior secured notes due 2028 (Ca/D/C) shed ½ point on about $8 million of secondary trading on Thursday, a source said.

The bonds softened to 26¼ bid.

The issue gave back 3 points on Wednesday, a day after the company filed for Chapter 11 bankruptcy.

The Durham, N.C.-based technology company on Tuesday reported it entered into a restructuring that will reduce its debt to about $800 million from $3.4 billion.

Lumen weakens

Lumen’s notes and CDS spreads remained weak, according to market sources on Thursday.

The 4½% notes due 2029 (B2/B+) declined 1 point to 53 3/8 bid on $15.8 million of secondary supply.

The notes were down 1 5/8 points on $7.4 million of volume on Wednesday.

Lumen’s 5 3/8% notes due 2029 (B2/B) traded Thursday nearly 2¼ points lower on $6.3 million of volume at the 54 bid area.

On Wednesday, the bonds had dropped more than 1¼ points on light trading totaling $1 million.

The Denver-based telecommunications company’s CDS spreads eased 82 bps over the past week ended Wednesday, according to a Moody’s Investors Service note.

The company’s CDS spreads were 1,372 bps as of Wednesday.

Rite Aid softens

Rite Aid’s 8% senior secured notes due 2026 (B3/CCC-/CCC) were active on Thursday on $7 million of trading with the issue quoted at 54¾ bid, a source said.

The company’s CDS spreads, meanwhile, moved out 484 bps for the past week ended Wednesday to 4,923 bps, according to a Moody’s report.

The Camp Hill, Pa.-based drug retailer completed two debt exchanges in 2022.

Adani makes inroads

Adani Green Energy’s 4 3/8% senior secured notes due 2024 (Ba3) shot up more than 8 points to 84½ bid on Thursday, a source said.

The company’s CDS spreads also tightened 55 bps over the past week.

Adani’s CDS spreads improved to 2,055 bps for the week ended Wednesday, according to a Moody’s note.

The CDS spreads remained wide from where they were before the Hindenburg Research report.

In the week after the report from the U.S.-based short seller, Adani’s CDS spreads had gapped out 1,074 bps for the period ended Feb. 1 to 1,537 bps from a spread of 463 bps for the week ended Jan. 25.

The India-based renewable energy company pulled an equity offering that had already closed as part of the fallout since the report’s release on Jan. 24.

Distressed returns

S&P U.S. High Yield Corporate Distressed Bond index one-day returns softened to minus 0.07% on Wednesday from 0.13% on Tuesday and 0.03% on Monday.

Month-to-date returns declined to 0.5% midweek from 0.57% on Tuesday and 0.44% on Monday.

Quarterly and year-to-date total returns dipped to 8.52% from 8.6% on Tuesday and 8.46% at the start of the week.

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