Market action thin, volatility down; newcomers to distressed debt space draw attention

By Cristal Cody

Tupelo, Miss., Dec. 23 – Fewer market participants hung around on Friday in the last session before the Christmas holiday with desks thinly staffed and volatility lower.

The distressed debt market was headed toward the year’s end with a growing list of names from fallen angels in 2022 and others that graced watchlists in December, according to market sources.

Taxable bonds from Toledo Hospital, dropped to junk in August and September, were trading on average around 64 bid in December, according to a BofA Securities Inc. note.

Toledo Hospital’s 5.325% senior secured notes due 2028 (Ba2/BB) ended July with a 97 handle.

Another newcomer is Office Properties Income Trust (Ba1/BBB-) after being downgraded to junk by Moody’s Investors Service in November. The trust’s bonds were trading at a 79 bid average this month, BofA said.

Several health care names graced watchlists in December, including Lannett Co. Inc., with $350 million of paper trading on average at the 27 bid area, Envision Healthcare Corp. with $939 million of notes at the 29 bid area, Bausch Health Cos. Inc.’s $12.94 billion of bonds in the 64 bid range and Emergent BioSolutions Inc.’s $450 million of bonds at the 45 bid area, according to the BofA note.

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