Morning Commentary: Mallinckrodt bonds jump on reported opioid liability settlement

By Paul A. Harris

Portland, Ore., Feb. 25 – High-yield bonds opened 1/8 point better on Tuesday but fell back at midmorning, in line with declining stock prices, a bond trader said.

Bonds of Mallinckrodt plc made sizable moves higher on news that the Dublin-based pharmaceutical company has reached a $1.6 billion settlement to cover its liability stemming from the opioid addiction matter, which is alleged to have killed thousands of people.

The big mover was the Mallinckrodt International Finance SA/Mallinckrodt CB LLC 5¾% senior notes due August 2022, up 24 points from Monday, at 83 bid, 85 offered.

The Mallinckrodt International Finance/Mallinckrodt CB 5½% senior notes due April 2025 were 3 points better at 84½ bid, 86½ offered on Tuesday.

In the high-yield new issue market issuers and dealers were taking a header on Tuesday, sidelined by coronavirus-related volatility that has roiled the global capital markets since late last week.

The active new issue calendar is thin.

Advantage Solutions Inc. is marketing $1.145 billion of notes: $345 million 6.5-year senior secured notes with initial talk in the mid-to-high 6% area and $800 million seven-year senior unsecured notes with initial talk in the high 10% area.

Meanwhile the market awaits the formal announcement of $3.25 billion of senior secured notes (Ba2/BB/BB) from Bausch Health Americas Inc.

The two-part deal is expected to come in tranches of eight-year notes with initial guidance in the low 4% area and 10-year notes with initial guidance in the mid-to-high 4% area, a bond trader said.

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