Pharma bonds mixed following Teva opioid settlement; Endo mostly lower; Bausch improves

By Cristal Cody

Tupelo, Miss., July 27 – Pharmaceutical bonds headed out mixed in the distressed space on Wednesday following another opioid-related settlement from Teva Pharmaceutical Industries Ltd.

The National Prescription Opiate Litigation Plaintiffs Executive Committee on Tuesday announced a $3.7 billion nationwide opioid-related settlement with Teva.

Teva also reported in July that it settled a lawsuit with San Francisco.

The company’s bonds rallied about ½ point to 5¼ points on heavy secondary volume of more than $77 million.

Mallinckrodt plc noted in June that it is the first company that has permanently resolved opioid litigation on a global scale after the manufacturer resolved claims it faced when it emerged from Chapter 11 bankruptcy.

Endo International plc’s paper traded ¼ point lower to ¾ point better as the company faces default following missed interest payments on two bonds.

Endo has settled several opioid-related lawsuits in 2021 and this year.

Pharmaceutical company Bausch Health Cos. Inc.’s senior notes (B3/B-/B) traded about ½ point to 1 point higher in mostly light secondary action on Wednesday.

Market volatility declined following the Federal Reserve’s rate hike.

The Federal Reserve raised interest rates by another 75 basis points on the heels of its 75-bps hike in June, then the largest increase since 1994, and left the likelihood of more hikes on the table as inflation soars.

The target range for the Federal Funds rate is now 2¼% to 2½%.

The Fed said it “anticipates that ongoing increases in the target range will be appropriate.”

The CBOE Volatility index declined 6.52% to 23.08.

The S&P 500 index, the Dow Jones industrial average and Nasdaq all were better on the day with the Nasdaq closing up 4.06%.

The iShares iBoxx High Yield Corporate Bond ETF rose 81 cents, or 1.06%, to $77.14 by the close.

Oil prices moved higher.

West Texas Intermediate crude oil for September delivery settled up $2.28 to $97.26 a barrel.

Teva notes climb

Teva’s bonds rallied about ½ point to 5¼ points higher on Wednesday with yields topping out at more than 7¼% following the lawsuit settlement, a source said.

Secondary action was heavy with more than $77.5 million of volume reported.

Teva Pharmaceutical Finance Co. LLC’s 6.15% senior notes due 2036 (Ba2/BB-) traded more than 4¾ points higher at a print of 89.85 on about $6 million of volume.

The Israel-based pharmaceutical manufacturer’s bonds were bid at 85 on Tuesday.

In addition to the $3.7 billion settlement announced Tuesday, Teva reported on July 12 that U.S. affiliate Teva Pharmaceuticals settled a lawsuit with the city and county of San Francisco for $24.8 million.

Endo paper mixed

Endo’s paper traded ¼ point lower to ¾ point better over the day, a market source said.

Endo subsidiary Par Pharmaceutical Inc.’s 7½% senior secured first-lien notes due 2027 (Caa2/CC) fell ½ point in strong trading action to 80¼ bid on Wednesday.

Endo Luxembourg Finance Co. Sarl’s 6 1/8% senior secured first-lien notes due 2029 (Caa2/CC) added ¾ point to 80 bid in thin supply over the day.

Endo Finance LLC’s 6% senior notes due 2028 (C/C) traded ¼ point lower on Wednesday before moving unchanged over the afternoon to 7½ bid.

The company’s 9½% senior secured second-lien notes due 2027 (Ca/C) also traded at 26 bid on Wednesday, nearly 1 point lower from where the issue was last seen in the prior week.

Endo has settled several opioid-related lawsuits in 2021 and 2022, including a $65 million settlement with Florida announced in January.

The Dublin-based pharmaceuticals company is in 30-day grace periods before defaults are declared after the company missed interest rate payments in June and earlier in July on its 5 3/8% senior notes due 2023 and 6% senior notes due 2023.

Bausch Health improves

Bausch Health’s senior notes (B3/B-/B) traded about ½ point to 1 point higher in mostly light secondary action on Wednesday, a source said.

The company’s 5% issue due 2029 was more than ½ point better at 53 bid by the afternoon.

The issue was trading down over ¾ point so far this week.

Bausch’s 5¼% senior notes due 2031 headed up about 1 point to around 54 bid over the session.

The Laval, Quebec-based pharmaceutical company’s notes have improved about ½ point since Friday.

Distressed index softens

The S&P U.S. High Yield Corporate Distressed Bond index turned negative on Tuesday.

One-day total returns fell to minus 0.29% from 0.29% on Monday.

Month-to-date total returns declined to 1.8% from 2.1% at the start of the week.

Year-to-date total returns also eased to minus 21.23% on Tuesday from minus 21% on Monday.

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