TPC notes slide; MultiPlan better; Mallinckrodt improves; Diamond Sports fizzles

By Cristal Cody

Tupelo, Miss., Nov. 15 – TPC Group Inc.’s bonds dove further on Monday on the heels of a weak third-quarter earnings report.

The chemical manufacturer’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) fell about 3½ points by the close.

“They were down 10, 11 points last week,” a source said. “Today, they basically continued to plunge.”

MultiPlan Corp.’s paper improved with the company’s 5¾% senior notes due 2028 (B3/B-) recovering 1¾ points during the session after declining over 5 points in the previous week.

MultiPlan on Monday issued a letter to shareholders that their largest customer, UnitedHealth Group, is not going to terminate their relationship, which helped push its stock up 2½% by the end of the day.

“A lot of people thought they were,” a source noted. “The bonds have not really responded to the news.”

Mallinckrodt plc’s paper mostly gained over the day with the issuer’s 5¾% senior notes up 1 point.

The financial markets were mixed with stocks lower and measured volatility edging up over 1%.

The iShares iBoxx High Yield Corporate Bond ETF fell 10 cents to $86.75.

Oil prices settled mostly unchanged as the week kicked off.

West Texas Intermediate crude oil benchmark futures for December deliveries rose 9 cents to settle at $80.88 a barrel.

In other secondary trading, Diamond Sports Group LLC’s bonds gave back gains following last week’s rally on news that parent Sinclair Broadcast Group Inc. had taken on a portion of the company’s debt.

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) fell over 5 points on more than $27 million of issues traded.

Mallinckrodt and Diamond Sports were among the most active distressed issuers during the session, a source said.

“Besides that, the distressed space was pretty quiet,” the source said.

TPC Group down

TPC Group’s bonds continued to flounder on Monday after diving on Friday following a weak third-quarter earnings report, a market source said.

TPC’s 10½% senior secured notes due 2024 (Caa2/CCC-/B-) were quoted going out at 76½ bid after ending Friday at 80 bid.

The Houston-based chemical manufacturer’s issue sank from trading at the 91 bid area a week ago.

MultiPlan, Mallinckrodt up

MultiPlan’s paper saw improvement on Monday after trading lower in the prior week following the company’s release of a letter to shareholders, a source said.

MultiPlan subsidiary MPH Acquisition Holdings LLC’s 5¾% senior notes due 2028 (B3/B-) rose 1¾ points to 90¾ bid.

The New York-based health care payment and network solution provider’s notes traded Friday down over 5 points on the week at 89 bid.

MultiPlan said in the shareholders letter that a document in a trial last week between UnitedHealth and an emergency physician staffing business “called MultiPlan’s and UHC’s relationship into question” and “became a subject of interest in the securities markets.”

The company said that over the past three years, its revenue from UnitedHealth has grown to a high of more than 30%.

“Unfortunately, our strong fundamental performance has been overshadowed by the unsubstantiated allegations by short sellers – motivated by their own economic self-interest – that our largest customer, UnitedHealthcare, is planning to terminate its relationship with MultiPlan,” the company said. “The bottom line is that MultiPlan’s relationship with UHC remains strong and recent sworn testimony contradicts the false suggestion that UHC intends to terminate that relationship.”

Mallinckrodt’s bonds also were mostly stronger on Monday, a source said.

The Dublin- and St. Louis-based bankrupt pharmaceutical maker’s 5¾% senior notes were quoted up 1 point at 57¾ bid.

Mallinckrodt’s 5 5/8% notes due 2023 traded up 1¼ points to 59¼ bid on $1 million of supply during the day.

Diamond Sports softens

Diamond Sports’ paper on Monday gave back gains made in the prior week, sources said.

Diamond Sports’ 5 3/8% senior secured notes due 2026 (Caa1/CCC) fell over 5 points to 51¾ bid on more than $27 million of issues traded.

The company’s 6 5/8% senior notes due 2027 (Ca/CC) dropped about 6¼ points to 27 bid with $12 million of paper changing hands during the session.

Sinclair announced a week ago that it has purchased and assumed the lenders rights and obligations for approximately $184.4 million under Diamond Sports’ existing accounts receivable securitization facility.

In October, Sinclair reported it has continued to seek new funding for the Chesapeake, Va.-based sports broadcast group unit.

Distressed index higher

Distressed index returns were higher on Friday.

The S&P U.S. High Yield Corporate Distressed Bond index’s one-day total return climbed to 0.25% from 0.15% on Wednesday, 0.18% on Tuesday and 0.73% at the week’s start. The U.S. financial markets were closed on Thursday for the Veterans Day holiday.

Month-to-date total returns rose to 1.38% from 1.13% on Wednesday, 0.99% on Tuesday and 0.81% on Nov. 8.

Year-to-date total returns improved on Friday to 30.81% versus 30.49% ahead of the holiday, 30.3% on Tuesday and 30.07% at the start of the week.

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