Endo, Mallinckrodt higher; Evergrande mixed; Greenland, Fantasia quiet; Peabody jumps

By Cristal Cody

Tupelo, Miss., Oct. 1 – Endo International plc’s bonds continued to improve on Friday on the heels of its latest opioid-related lawsuit.

Endo’s 6% senior notes due 2028 (Caa3/CCC+) were quoted up about 1½ points on the day and 6 points better on the week.

Mallinckrodt LLC’s bonds continued Friday to back off of heavy losses seen midweek.

Meanwhile, China Evergrande Group’s paper traded flat to about ½ point better in light secondary action.

Gramercy Funds Management said Thursday in its fourth-quarter strategy outlook report that the Greenwich, Conn.-based emerging markets investment manager has added a “small position” in Evergrande.

“With bond prices in the 30s, we believe that there is a compelling risk/reward given substantial non-core assets at the issuing entity level as well as the essential nature of the enterprise,” Gramercy said.

Secondary action was quieter in the offshore bond space on Friday, according to market sources.

Shanghai-based real estate developer Greenland Global Investment Ltd.’s 6¼% senior notes due 2022 (Ba2/BB-) were last seen trading Thursday up 1¼ points at 90¼ bid, down about 4 points on the week.

Fantasia Holdings Group Co. Ltd.’s 10 7/8% senior notes due 2023 (B/CCC) were not active over the day.

The China-based property developer’s 10 7/8% senior notes due 2023 (B/CCC) were last seen trading midweek following S&P Global Ratings’ downgrade at 32 3/8 bid, down about 8½ points from the prior week.

S&P downgraded Fantasia on Wednesday, expressing doubt over the issuer’s ability to pay $760 million of senior notes that are due on Monday and on Dec. 18.

In other distressed issues, Ahern Rentals, Inc.’s 7 3/8% second priority senior secured notes due 2023 (Caa2/CCC+) also quieted on Friday after climbing 1 point in the prior session.

Peabody Energy Corp.’s 8½% senior secured notes due 2024 (Caa1/CCC-) soared 3 points over the day.

The “CCC segment is now at just 11% of the HY market size, its lowest level in decades,” according to a BofA Securities, Inc. research note on Friday.

Endo bonds improve

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC+) were quoted up about 1½ points at 73 bid by late Friday afternoon, a source said.

Endo announced on Tuesday that it reached a $7.5 million agreement with the Louisiana Attorney General's office to settle all opioid-related cases and claims.

The Dublin-based pharmaceuticals maker reported on Sept. 9 that subsidiaries Endo Health Solutions Inc., Endo Pharmaceuticals Inc., Par Pharmaceutical, Inc. and Par Pharmaceutical Cos, Inc., settled three opioid-related cases in New York for $50 million.

Endo also announced in July that subsidiaries reached a $35 million opioid-related settlement in Tennessee.

Mallinckrodt better

Mallinckrodt’s 5¾% notes due 2022 climbed 1 point to 50¾ bid by the close on Friday, a source said.

The notes added about 1¾ points on Thursday after sinking 9 points in the prior session.

The pharmaceuticals company’s bankruptcy hearing is ongoing in the U.S. Bankruptcy Court for the District of Delaware. The company filed an amended Chapter 11 plan and first amended joint plan of reorganization on Wednesday.

New York’s opioid-related lawsuit against Mallinckrodt is moving through the bankruptcy court.

Mallinckrodt, based in Dublin and St. Louis, filed for Chapter 11 on Oct. 12, 2020.

Evergrande edges up

China Evergrande’s 8¾% senior notes due 2025 (C/C/C) recovered ½ point to 24¼ bid in light trading on Friday, a source said.

The bonds are down about 2 points on the week but have moved off the mid-week lows in the 23 bid area.

The Shenzhen, China-based real estate developer has entered into a 30-day grace period following missed bond payments due last week, according to market sources.

Ahern notes calm

Las Vegas-based equipment rental company Ahern Rentals’ 7 3/8% second priority senior secured notes due 2023 (Caa2/CCC+) also quieted on Friday after gaining 1 point on $6 million of paper traded on Thursday, sources said.

The notes were last seen at 95¾ bid and yielding over 10%.

Ahern announced Wednesday that it will not refinance the $550 million of outstanding paper this year due to market conditions.

Moody’s Investors Services on Thursday downgraded the company to Caa1 from B3 and changed the company’s outlook to negative from stable.

Peabody rallies

Distressed index returns ended September with month-to-date total returns of 2.79%.

The S&P U.S. High Yield Corporate Distressed Bond index’s year-to-date total returns at the close of the month totaled 30.23%.

The financial markets were mostly improved as volatility lessened after a short-term government spending bill was passed on Thursday.

The iShares iBoxx High Yield Corporate Bond ETF rose 21 cents to $87.41.

Oil prices were flat to under $1 better on the day.

Brent crude futures for November deliveries settled unchanged at $78.64 a barrel.

In distressed energy issues, Peabody Energy’s 8½% senior secured notes due 2024 (Caa1/CCC-) soared in the secondary market this week, a source said.

The notes jumped 3 points on Friday to 90 bid.

The St. Louis-based coal producer’s issue has climbed from the 84¼ bid area a week ago.

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