Distressed bonds with 8½% coupon lifted; Shutterfly, Bausch, Qurate Retail better

By Cristal Cody

Tupelo, Miss., May 17 – Shutterfly, LLC’s bonds gained in secondary trading on Wednesday after coming under pressure the previous day following the company’s launch of a debt exchange offer and consent solicitation.

Shutterfly’s 8½% senior secured notes due 2026 (B2/CCC) improved about 1 3/8 points after declining about ¾ point on Tuesday after the announcement.

Distressed bonds carrying an 8½% coupon found a sweet spot on Wednesday in the secondary market, sources reported.

Bausch Health Cos. Inc.’s 8½% senior secured notes due 2027 (Caa1/CCC+/B) jumped 3½ points over the session.

Qurate Retail Inc.’s 8½% senior notes due 2029 (Caa2/CCC-) gained 1½ points by the close.

Bausch Health was one of the most heavily traded distressed names seen during the session with its other bonds up about 1½ points to more than 3 points after the company announced a court ruling in its favor, a source said.

Bausch’s 11% senior secured notes due 2028 (Caa1/CCC+/B) climbed 2 points on more than $21 million of secondary volume on Wednesday.

Risk-on tone was improved with stock indices closing up more than 1% and measured market volatility down about 7%.

The S&P 500 index rallied 1.19%.

The iShares iBoxx High Yield Corporate Bond ETF recovered 20 cents, or 0.27%, to $74.08.

The CBOE Volatility index was off 6.95% by the day’s close at 16.74.

Shutterfly gains on day

Shutterfly’s 8½% senior secured notes due 2026 (B2/CCC) traded Wednesday about 1 3/8 points higher at 45 bid in mostly light secondary action on the heels of the debt exchange offer for the issue, a source said.

The bonds were down about ¾ point on Tuesday after the announcement.

Shutterfly announced the previous day that it launched an offer to exchange the 8½% first-priority notes for new 9¾% first-priority senior secured notes due 2027 and new 8¾% second-priority senior secured cash/PIK notes due 2027 or first-lien term loans.

The exchange offer expires June 14.

The Redwood City, Calif.-based commerce provider of personalized photo and design products is majority owned by investment funds managed by Apollo Global Management.

Bausch bonds rally

Bausch’s paper rallied about 1½ points to more than 3 points in heavy trading action on Wednesday, sources said.

Bausch’s 11% senior secured notes due 2028 (Caa1/CCC+/B) climbed 2 points to head out at 77½ bid on more than $21 million of paper traded.

The 4 7/8% senior secured notes due 2028 (Caa1/CCC+/B) went out 3 points higher at 63¼ bid on $9.4 million of secondary volume.

Bausch Health Americas, Inc.’s 8½% senior secured notes due 2027 (Caa1/CCC+/B) also jumped 3½ points to 54¼ bid in lighter supply.

Bausch announced on Wednesday that the U.S. District Court of Delaware denied a motion by Norwich Pharmaceuticals, Inc. in a lawsuit filed against the company by its Salix Pharmaceuticals, Ltd. unit.

Shares in the Laval, Quebec-based pharmaceutical company soared 24.09% to close at $7.47 in heavy trading.

Qurate paper higher

In distressed retail, Qurate Retail’s 8½% senior notes due 2029 (Caa2/CCC-) gained 1½ points by the close to a quote of 33¾ bid on Wednesday, a source said.

The West Chester, Pa.-based company, formerly known as Liberty Interactive LLC, owns home shopping network QVC Inc.

Distressed returns soft

S&P U.S. High Yield Corporate Distressed Bond one-day returns improved slightly on Tuesday to minus 0.09% from minus 0.11% at the start of the week.

Month-to-date total returns declined to minus 0.61% versus minus 0.52% on Monday.

Year-to-date total returns dropped to 6.67% on Tuesday from 6.77% at the week’s start.

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