Endo, Talen, Diamond Sports, Washington Prime notes down; Transocean dips; Peabody up

By Cristal Cody

Tupelo, Miss., July 8 – Endo Finance LLC’s bonds continued to decline in heavy distressed secondary action on Thursday.

Endo’s 6% senior notes due 2028 (Caa2/CCC+) dropped 1 7/8 points to 62 5/8 bid on $26.8 million of paper traded over the session, a source said.

On Wednesday, the issue fell 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 will release its second-quarter results on Aug. 5.

The company reported soft first-quarter earnings and revenue in May.

Diamond Sports declines

Diamond Sports Group LLC’s bonds also traded lower on Thursday, a source reported.

Diamond Sports’ 6 5/8% senior notes due 2027 (Caa2/CCC-) were quoted at 45 bid, down 2¾ points on the day, on $4 million of secondary activity.

Diamond Sports’ notes have softened since parent company Sinclair Broadcast Group, Inc. disclosed attempts to secure new funding for the Chesapeake, Va.-based sports broadcast group.

Sinclair reported in a June 21 filing with the Securities and Exchange Commission that it made two proposals to lenders and noteholders of Diamond Sports, including a March 22 proposal and an April 29 proposal, but has been unable to reach a definitive agreement.

The March proposal featured $600 million of new money first priority super priority debt and up to $6.34 billion of second priority super priority debt.

In the April offer, Sinclair proposed $500 million of new money financing and a roll-up of its notes into $100 million of first-lien bonds in three tranches.

Talen bonds weaken

In distressed energy issues, Talen Energy Supply LLC’s bonds declined about 1 7/8 points to 3 points in the secondary market on Thursday, a source reported.

Talen’s 6½% senior notes due 2025 (B3/CCC+/B) were off 2½ points at 60½ bid in thin trading of under $1 million.

The notes declined 2 points on Tuesday and fell ½ point on Wednesday.

The issue 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) traded down about 3 points to 65½ bid on $2 million of volume during Thursday’s session.

The 2026 notes softened 3 points on Tuesday and shed ¼ point on Wednesday.

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.

Transocean lower

Transocean Inc.’s bonds also remained softer on Thursday after declining 1¼ points to 1¾ points in the prior session, according to a market source.

Transocean’s 7½% senior notes due 2031 (C/CCC/) dropped 2¾ points to 74 bid on $1 million of trading supply.

The notes were quoted off more than 1¾ points on $5 million of secondary volume on Wednesday.

S&P raised the Vernier, Switzerland-based offshore driller’s issuer and bonds ratings on Wednesday but noted the company’s potential to 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 following year, S&P said.

Shelf Drilling soft

Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) were last seen trading on Wednesday down about ¾ point at 81½ bid, a source said Thursday.

The issue has climbed from trading at 46¼ bid at the beginning of the year.

S&P revised the company’s outlook to stable from negative on Thursday, noting a supportive oil price operating environment.

Oil prices settled higher on the day after declining in the prior two sessions.

North Sea Brent crude oil futures for September deliveries rose 69 cents to settle at $74.12 a barrel.

West Texas intermediate crude oil benchmark futures for August deliveries settled up 74 cents at $72.94 a barrel and September deliveries added 72 cents to settle at $72.22 a barrel.

Overall market tone was softer with major stock indices closing lower.

The iShares iBoxx High Yield Corporate Bond ETF fell 19 cents to close at $87.85.

The S&P U.S. High Yield Corporate Distressed Bond index finished Wednesday down 0.17% and with month-to-date total returns of negative 0.11% and year-to-date total returns of 27.73%.

Peabody Energy rallies

In other distressed energy issues, Peabody Energy Corp.’s 8½% senior secured notes due 2024 (Caa1/CCC-) rose more than 1¼ points to 78½ bid in thin trading of less than $1 million on Thursday, a source said.

The St. Louis-based coal producer’s notes have climbed from where the issue was quoted on April 8 trading at 47¼ bid.

Washington Prime slips

Elsewhere on Thursday, Washington Prime Group, LP’s 6.45% notes due 2024 (C/D/CC) fell more than ½ point to 64½ bid after the company received final bankruptcy court approval for a loan, a source said.

The notes traded at 62½ bid at the start of the year.

Washington Prime Group Inc. filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on June 13.

The company secured a $100 million non-amortizing multiple draw super-priority senior secured debtor-in-possession term loan facility from the consenting creditors to support daily operations and has received final court approval to access the loan, according to a filing on Thursday.

A hearing on approval of the company’s Chapter 11 disclosure statement is scheduled for Monday.

Under Chapter 11, the company plans to restructure its corporate-level debt, either through a full equitization of its unsecured notes or an alternative value-maximizing transaction that would repay in full in cash all of its corporate debt.

The bankruptcy filing came after the Columbus, Ohio-based shopping center real estate investment trust had been in a forbearance agreement over a missed $23.2 million interest payment on the 6.45% notes that was due Feb. 15.

GEO bonds gain

Meanwhile, GEO Group Inc.’s 6% guaranteed senior notes due 2026 (B2/CCC) rallied nearly 2½ points to head out near the 85 bid area on $2 million of trading volume on Thursday, a source said.

The notes have improved more than 10 points from where the issue was quoted on June 21 at 74¼ bid.

The 6% bonds traded at the 78 bid area in early January.

GEO’s bonds had softened in the first half of the year as the U.S. Justice Department moved in January to cut ties with private prison operators and after S&P Global Ratings dropped the company’s debt ratings by two notches in May.

In January, U.S. president Joe Biden instructed the Justice Department to not renew contracts with privately operated prison operators.

GEO, a Boca Raton, Fla.-based real estate investment trust that specializes in secure and processing facilities and electronic monitoring, has borrowed all of its remaining revolving credit facility availability and is building large cash balances in a strategy that usually precedes a debt exchange, S&P said in May.

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