Bausch Health declines; Transocean bonds gain as oil weakens; Community Health softens

By Cristal Cody

Tupelo, Miss., Aug. 1 – Bausch Health Cos. Inc.’s bonds declined about 1 point to over 3 points on Monday as one of the most active distressed names seen in the first session of August.

The secondary action followed a downgrade from S&P Global Ratings.

Monday ended on a weak tone with stock indices slightly lower and oil down nearly $5 a barrel. The S&P 500 index fell 0.28%.

The iShares iBoxx High Yield Corporate Bond ETF was up 2 cents, or 0.03%, to $77.91 by the close.

Market volatility also was higher on the day.

The CBOE Volatility index rose 7.08% to 22.84.

Distressed offshore driller Transocean Inc.’s bonds rallied over 2 points to more than 5 points as oil prices slid in the first session of the month.

The West Texas Intermediate crude oil benchmark futures for September deliveries settled $4.73 lower at $93.89 a barrel.

Meanwhile, S&P U.S. High Yield Corporate Distressed Bond index July total returns ended July at 2.53%, well up from June’s total returns of minus 9.49%.

Moody’s Investors Service said in its second-quarter default monitor report released Monday that the number of defaults is expected to increase with the U.S. default rate projected to rise to 4.2%.

In the second quarter, eight companies defaulted on more than $10 billion of debt, with the largest defaults from Talen Energy Supply, LLC and Revlon Consumer Products Corp.

Defaults were dominated by distressed exchanges in the second quarter and up marginally from over $9 billion of defaults in the first quarter, according to the report.

All of the rated defaults in the second quarter were majority owned/backed by private equity firms, including Envision Healthcare Corp., Moody’s said.

In other secondary action on Monday, Community Health Systems Inc.’s 6 7/8% senior secured second-lien notes due 2029 (Caa2/CCC/CCC) shed Friday’s gains and dropped 5½ points.

Bausch Health lower

Bausch Health’s senior notes declined about 1 point to over 3 points on Monday as one of the most active distressed names seen during the session, according to a market source.

The Laval, Quebec-based pharmaceutical company’s 5% senior notes due 2028 (Caa2/CCC/B) dropped 1 5/8 points to 52 1/8 bid on strong trading volume totaling $11 million.

Bausch’s 4 7/8% senior secured notes due 2028 (B2/B/BB) declined 3¼ points to 76¼ bid by the day’s end on $8 million of secondary activity.

Bausch’s 5¼% senior notes due 2030 (Caa2/CCC/B) also softened 1¼ points on Monday to 50¼ bid on $7 million of paper traded.

S&P said Monday that it downgraded Bausch based on more challenging business prospects after a court order would result in a company product facing generic competition and increasing the risk the company will not be able to refinance or repay debt.

Transocean jumps

Transocean’s notes traded about 2½ points to over 5 points better in light activity on Monday, a source said.

The company’s 6.8% senior notes due 2038 (C/CCC-) rallied 5½ points to 51½ bid.

Secondary volume totaled $1 million.

Transocean’s 8% debentures due 2027 (C/CCC-) climbed 2¾ points to 69¾ bid over the day, also on $1 million of paper changing hands.

The Vernier, Switzerland-based offshore driller’s 11½ senior guaranteed notes due 2027 (Caa3/CCC+) traded 2½ points higher at 97½ bid on stronger trading volume Monday of $6 million.

CHS notes down

Elsewhere, CHS/Community Health Systems, Inc.’s 6 7/8% senior secured second-lien notes due 2029 (Caa2/CCC/CCC) dropped 5½ points on Monday on mostly light secondary action totaling $1 million, a source said.

The bonds were quoted at 50½ bid.

CHS’ paper had improved on Friday by 2 points after plunging nearly 20 points midweek after the Franklin, Tenn.-based operator of acute care and outpatient facilities company reported heavy second-quarter losses.

Distressed July returns up

S&P U.S. High Yield Corporate Distressed Bond index total returns climbed higher in July.

One-day returns rose to 0.92% on Friday in the last session of the month from minus 0.23% on Thursday, 0.04% on Wednesday, minus 0.29% on Tuesday and 0.29% at the start of the week.

July total returns ended at 2.53% on Friday, compared to total returns in June of minus 9.49%.

Year-to-date total returns rose on Friday to minus 20.67%, compared to minus 21.39% on Thursday, minus 21.2% on Wednesday, minus 21.23% on Tuesday and minus 21% in the July 25 session.

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