Bombardier notes better after sale conditions met; Endo up on BioSpecifics acquisition

By James McCandless

San Antonio, Dec. 2 – The manufacturing and pharmaceuticals industries were in focus in the Wednesday distressed debt market.

Bombardier, Inc.’s notes were in better form after the company said that it had regulatory approval to sell its rail unit.

Meanwhile, in the pharma space, Endo International plc’s issues rose after announcing the completion of an acquisition.

Sector peer Mallinckrodt plc’s paper varied.

In oil and gas, Callon Petroleum Co.’s notes improved throughout the day despite receiving a ratings downgrade.

While oil futures reached higher, Occidental Petroleum Corp.’s and Antero Resources Corp.’s issues diverged in direction while Transocean Ltd.’s paper was under pressure.

Real estate company Realogy Holdings Corp.’s notes were traded lower amid receiving a positive ratings shift to stable from negative.

Elsewhere, in travel, Hertz Global Holdings, Inc.’s issues gained ground.

Bombardier gains

Bombardier’s notes were in better form on Wednesday, traders said.

The 7 7/8% senior notes due 2027 picked up 1¼ points to close at 88¼ bid. The 7½% senior notes due 2024 rose ¼ point to close at 92½ bid.

About $21 million of the notes were on the tape.

On Tuesday, the Montreal-based air and rail manufacturer announced that it had received the necessary regulatory approvals to complete the sale of its rail unit to a French counterpart.

With the regulatory hurdles cleared, the company said it was on track to complete the $8.4 billion transaction with Alstom.

The deal is set to close on Jan. 29, 2021.

Bombardier also hired rail executive Bart Demosky as its new chief executive officer.

Earlier in the year, Alstom had raised doubts on whether the sale could be completed after Bombardier’s financial status took a hit due to the coronavirus pandemic.

Specifically, Alstom said that “negative developments” in the rail segment’s operations and finances were a point of concern.

Endo trades up

Meanwhile, in the pharma space, Endo’s issues rose, market sources said.

The 6% senior notes due 2028 gained ½ point to close at 80 bid. The 9½% notes due 2027 moved up ¾ point to close at 111¼ bid.

Early Wednesday morning, the Dublin-based pharmaceuticals company announced the completion of its acquisition of competitor BioSpecifics Technologies Corp.

The all-cash transaction was completed for $540 million.

In a statement, president and chief executive officer Blaise Coleman said that the move enhances the name’s adjusted EBITDA and the profitability of some of its products.

As part of the deal, BioSpecifics will receive a royalty stream from some of Endo’s collagenase-based therapies.

“Those notes have been quiet for a while,” a trader said. “After a lot of the settlements over opioids they’ve been back of mind.”

For much of the year, the ongoing fallout of the opioid epidemic has weakened the company’s structure and others in the industry.

Staines-upon-Thames, England-based sector peer Mallinckrodt’s paper varied.

The 10% paper due 2025 dropped 3 points to close at 89 bid. The 4¾% senior notes due 2023 held level to close at 7½ bid.

Callon improves

In oil and gas, Callon Petroleum’s notes improved throughout the day, traders said.

The 6 1/8% senior notes due 2024 garnered 1¼ points to close at 43¼ bid. The 6 3/8% senior notes due 2026 shot up 3¾ points to close at 39¼ bid.

The Houston-based independent oil and gas producer’s structure was positive, largely due to a rise in futures, despite receiving a ratings downgrade from Moody’s Investors Service.

The agency cut the company’s probability of default rating, corporate family rating and its senior unsecured notes rating.

The outlook was revised to stable from negative.

Moody’s anticipates that the name will make further debt exchanges that it would consider distressed exchanges.

Oil names diverge

While oil futures reached higher, distressed energy names diverged, market sources said.

West Texas Intermediate crude oil futures for January delivery moved up 73 cents to finish at $45.28 per barrel.

North Sea Brent crude oil futures for February delivery closed at $48.25 per barrel after an 83 cent pickup.

Houston-based producer Occidental Petroleum’s issues were pushed apart.

The 2.9% senior notes due 2024 shifted up ½ point to close at 94 bid. The 2.7% senior notes due 2022 closed level at 98½ bid.

Denver-based E&P company Antero Resources’ paper also moved in opposite directions.

The 5 1/8% senior notes due 2022 lost ½ point to close at 95½ bid. The 5 5/8% senior notes due 2023 added ½ point to close at 92 bid.

Steinhausen, Switzerland-based contract driller Transocean’s notes were under pressure.

The 7½% senior notes due 2031 gave up 1 point to close at 27 bid. The 7½% senior notes due 2026 closed level at 31¾ bid.

Realogy lower

Real estate name Realogy’s issues finished on the negative side, traders said.

The 9 3/8% senior notes due 2027 chalked off ¼ point to close at 111 bid.

In the middle of Wednesday activity, the Madison, N.J.-based real estate services name saw a positive shift in its ratings from Moody’s.

The agency changed the company’s outlook to stable from negative and raised its speculative grade liquidity rating.

Moody’s also affirmed Realogy’s corporate family rating, probability of default rating, senior secured bank credit facility rating and issue-level ratings.

In a note, Moody’s said that improving conditions in the housing market enables free cash flow and debt repayment in 2021.

Hertz gains

Elsewhere, in travel, Hertz’s paper gained ground, market sources said.

The 6¼% senior notes due 2022 gained 1¼ points to close at 45 bid. The 5½% senior notes due 2024 picked up 1 point to close at 45 bid.

This week, the Estero, Fla.-based car rental provider announced that it had reached an agreement to sell all of the assets of its wholly owned subsidiary, Donlen Corp., to Athene Holding Ltd.

The deal was struck for an anticipated $825 million, though through adjustments the final price could be $875 million at closing.

© 2015 Prospect News.
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