Exela notes improve; AMC declines; Transocean softens; Talen bonds lower; Endo down

By Cristal Cody

Tupelo, Miss., July 7 – Exela Technologies, Inc.’s notes rallied in heavy distressed secondary trading on Wednesday.

Debt issuer Exela Intermediate LLC’s 10% senior secured first-lien notes due 2023 (Caa3/CCC-) added nearly 3 points to 70½ bid by the close on $22.8 million of secondary volume, a source said.

The notes had softened 7/8 point on $4.95 million of trading action on Tuesday after wrapping the prior week about 25 points higher.

The issue traded at 31 bid as the year opened.

The Irving, Tex.-based software and services company’s bonds have rallied after Exela 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.

AMC notes soften

In other heavily traded distressed issues on Wednesday, AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) fell 1¾ points to 99¾ bid on $17 million of paper traded, a source said.

The issue started the year in the 23¼ bid range.

AMC, a Leawood, Kan.-based movie theater owner, raised approximately $428 million in a registered offering of 43 million shares of class A common stock in May.

Transocean declines

In distressed energy issues, Transocean Inc.’s bonds traded about 1¼ points to 1¾ points weaker on the day, according to a market source.

Transocean’s 7½% senior notes due 2031 (C/CCC/) slid more than 1¾ points to 75½ bid on $5 million of trading supply.

The Vernier, Switzerland-based offshore driller’s 9.35% notes due 2041 (C/CCC-/) also were down about 1½ points at 75¾ bid on $5 million of paper traded.

S&P raised Transocean Ltd.’s issuer and bond ratings on Wednesday but noted the CCC issuer rating “reflects the potential that the company will undertake additional distressed transactions over the next year.”

Transocean has $461 million of debt that matures over the next 12 months, $588 million of debt that matures during the following 12 months and nearly $900 million of debt due the year after that.

S&P said the company’s outlook is negative.

Oil prices were down a second day on Wednesday.

North Sea Brent crude oil futures for September deliveries fell $1.10 to settle at $73.43 a barrel.

West Texas intermediate crude oil benchmark futures for August deliveries dropped $1.17 to settle at $72.20 a barrel, and September deliveries declined $1.08 to settle at $71.50 a barrel.

Overall market tone was mixed.

The iShares iBoxx High Yield Corporate Bond ETF rose 3 cents to close at $88.04.

The S&P U.S. High Yield Corporate Distressed Bond index kicked the short week off down 0.09% on Tuesday. The index has month-to-date total returns of 0.07% and year-to-date total returns of 27.95%.

Talen Energy weakens

In other energy issues, Talen Energy Supply LLC’s bonds continued to soften after trading down about 2 points to 3 points in the prior session, a source said.

Talen’s 6½% senior notes due 2025 (B3/CCC+/B) fell ½ point to 68 bid on Wednesday.

The issue declined 2 points on Tuesday and has weakened from the 84½ bid range at the end of May and the 82 bid area at the start of the year.

Talen’s 10½% notes due 2026 (B3/CCC+/B) also edged down ¼ point to 68¾ bid after softening 3 points on Tuesday.

The bonds traded at 91 bid at the end of May and the 89 bid area in early January.

The Woodlands, Tex., and Allentown, Pa.-based power company’s outlook was dropped to negative from stable on June 16 by Moody’s Investors Service.

Endo bonds lower

Distressed pharmaceutical bonds softened in strong secondary activity during the session, sources said.

Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) dropped 2¾ points to 64¼ bid on $7 million of volume.

The notes have declined from the 84 bid area seen at the beginning of 2021.

Parent Dublin-based pharmaceuticals maker Endo International plc reported soft first-quarter earnings and revenue in May.

The company will release second-quarter results on Aug. 5.

Mallinckrodt slips

Bankrupt pharmaceuticals maker Mallinckrodt plc’s 5¾% notes due 2022 traded at 68½ bid during the session, down 1 3/8 points from where the issue was last seen in the prior week, a source said.

The bonds remain higher than where the issue traded at 36¼ bid at the beginning of the year.

Mallinckrodt 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.

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