Medline bonds trade higher; Envision declines; Team Health notes soften; Bausch up

By Cristal Cody

Tupelo, Miss., May 23 – Junk bonds trading at or near distressed levels saw a mixed reception on Monday in mostly light secondary action ahead of the long holiday weekend.

Medline Industries, LP’s 5¼% senior notes due 2029 jumped 1¾ points as one of the day’s most active names.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 traded 2¾ points lower.

Team Health Holdings, Inc.’s 6 3/8% senior notes due 2025 were down about ½ point.

Meanwhile, Bausch Health Cos. Inc.’s 6¼% senior notes due 2029 climbed over 2 points by late in the day.

Overall trading in the junk space was lighter as the week kicked off ahead of Friday’s early close for the Memorial Day holiday, sources said.

Stock indices all ended the day higher with the S&P 500 index up 1.86% and the Nasdaq 1.59% better.

The iShares iBoxx High Yield Corporate Bond ETF closed up 30 cents at $76.76.

Market volatility also pulled back. The Chicago Board Options Exchange’s CBOE Volatility index fell 3.23% to 28.48.

July crude oil prices were little changed.

West Texas Intermediate crude oil benchmark futures for July deliveries settled 1 cent higher at $110.29 a barrel.

Transocean Inc.’s 8% debentures due 2027 picked up 1¼ points and were among the few distressed energy names seen over the day, a source said.

Medline higher

Medline’s 5¼% senior notes due 2029 (Caa1/B-/B+) traded Monday up 1¾ points to 82 bid, a source said.

The issue was busy with $26 million of paper traded.

Medline priced $2.5 billion of the notes via Mozart Debt Merger Sub Inc./Medline Borrower, LP at par in September as part of the largest LBO financing deal since the global financial crisis.

The Northfield, Ill.-based health care company was acquired in a leveraged buyout in 2021 by Blackstone Group, Carlyle Group and Hellman & Friedman LLC.

Envision pressured

Envision Healthcare’s 8¾% senior notes due 2026 (Ca/D) dropped 2¾ points from where the paper last traded a week ago to 31¼ bid, a market source said.

The notes have shed about 10 points since April in thin secondary volume.

S&P downgraded the notes to D at the start of May after Envision conducted a distressed exchange with proceeds used to repurchase part of its outstanding term loans and notes at below par.

The agency upgraded the Nashville-based health care company and hospital-based physician group on May 16 after Envision completed a restructuring in April that included moving 83% of its AmSurg business into an unrestricted subsidiary.

The company raised $1.1 billion in first-lien debt at the subsidiary and issued $1.3 billion in second-lien debt at the unrestricted subsidiary, which was loaned back to the parent and used to repurchase about $1.9 billion of existing term loans and unsecured debt at Envision.

Team Health lower

Team Health’s 6 3/8% senior notes due 2025 (Caa3/CCC/CCC-) were quoted trading on Monday at the 74 bid area in light activity, a source said.

The bonds have dropped over 10 points since April.

The Knoxville, Tenn.-based medical staffing firm is owned by Blackstone Group LP.

Bausch Health up

Bausch Health’s 6¼% senior notes due 2029 (B3/B/B) went out over 2 points better on Monday at 56 bid, according to a market source.

The issue saw $3 million of volume.

The Laval, Quebec-based pharmaceutical company reported weak first-quarter earnings earlier in the month and was downgraded by Moody’s Investors Service.

Transocean improves

Transocean’s 8% debentures due 2027 (Ca/CCC) traded 1¼ points better on Monday at 77¼ bid, a market source said.

Secondary action was light with $2 million of the Vernier, Switzerland-based offshore driller’s paper turning over.

Distressed index gains

Returns in the S&P U.S. High Yield Corporate Distressed Bond index finished higher on Friday.

One-day total returns were 0.12% on Friday, minus 0.81% on Thursday, minus 1.34% on Wednesday, 0.23% on Tuesday and minus 0.13% at the start of the week.

Month-to-date total returns rose to minus 9.69% from minus 9.8% on Thursday, minus 9.06% on Wednesday, minus 7.82% on Tuesday and minus 8.04% in the May 16 session.

Year-to-date index returns on Friday came to minus 16.82% versus minus 16.92% on Thursday, minus 16.23% on Wednesday, minus 15.09% on Tuesday and minus 15.29% at the start of the week.

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