HY market softens as OECD forecasts slow employment recovery; Avolon trades up on cancelled Boeing order; Endo pops on FDA approval for cellulite drug — Mid-Day Commentary

The high yield market opened slightly weaker this morning after the Organisation for Economic Cooperation and Development (OECD) predicted a grim outlook for unemployment through 2021, which could be exacerbated by a second wave of the Covid-19 pandemic.

The OECD forecasts unemployment to reach 9.7% at the end of 2020 across the 37 countries that comprise the organization, compared to 5.3% at the end of 2019. With a second wave, the rate could be pushed to 12.6%.

The rate is expected to be 7.7% at the end of 2021, jumping to 8.9% if there is a second wave.

Bellwether energy issuer Occidental Petroleum’s USD 1.15bn 3.4% senior unsecured notes due 2026 traded at 85.5 to yield 6.44% today from trades at 86 to yield 6.33% yesterday (6 July), according to MarketAxess. 

Automotive bellwether Ford’s USD 1.5bn 3.087% senior unsecured notes due 2023 softened to 96.02 to yield 4.795% today from trades at 97.138 to yield 4.305% yesterday, according to MarketAxess. 

Avolon’s notes traded up this morning after the aircraft lessor cancelled commitments to acquire 27 of Boeing’s 737MAX aircraft in 2020-2022, after cancelling 75 of the jets in April, according to a sellsider. 

The company’s USD 650m 3.25% senior unsecured notes due 2027 traded at 84 to yield 6.244% from trades at 82 to yield 6.629% on 10 June, according to MarketAxess. 

Endo International’s debt and equity popped this morning after the pharmaceutical company announced it had obtained US Food and Drug Administration (FDA) approval for its cellulite treatment drug, Qwo, according to a buysider and a sellsider. Qwo is the first FDA-approved injectable treatment for cellulite, the company said.  

The borrower’s USD 1.2bn 6% senior unsecured notes due 2028 traded up to 68 this morning for a 12.437% yield compared to 65 yesterday, while its USD 940.5m 9.5% second lien notes due 2027 inched up to 107.75 yielding 7.86% from 106.75 yesterday. Endo’s stock jumped 6.2% this morning from yesterday’s close, to USD 3.84 and a market cap of USD 882m. 

Calumet Specialty Products debt traded actively this morning as the issuer launched a private exchange offer to holders of its USD 350m 7.625% senior unsecured notes due 2022 for USD 200m of new 9.25% senior secured first lien notes due 2024.  

Holders exchanging prior to the 17 July 5pm ET early consideration deadline are slated to get par for par value for their notes, while participants will get USD 950 in new notes for every USD 1000 in notes tendered after that deadline but prior to 31 July expiration.

The targeted notes traded at 101.75 for a 6.395% yield versus par on 6 July, according to MarketAxess.

Meanwhile Calumet’s unsecured notes due 2023 that are not offered the opportunity to swap into secured paper fell about five points today. The USD 325m senior unsecured notes 7.75% due 2023 changed hands at 93.25 this morning for a 10.619% yield, down from 98 on 9 June. 

Diebold’s loans jumped this morning after the ATM manufacturer launched its dual-tranche USD 1.085bn-equivalent euro-dollar notes due 2025. Proceeds from the deal will refinance the company’s existing TLA, TLA-1 and 2020 revolving credit facility. 

The USD 347.3m Libor+ 475bps TLA due 2022 rose to the 98.667/100 context from trades at 97/99.5 on 3 July, according to Markit.

The USD 650m L+ 925bps TLA-1 due 2022 popped to the 108/110 context today from trades at 100.875/102.875 yesterday, according to Markit.

Novavax’s shares jumped by double digits this morning, after the biotech company announced it received USD 1.6bn in federal aid to develop and manufacture a Covid-19 vaccine as part of the government’s Operation Warp Speed program. Its shares traded at USD 104 today, up 31.1% from previous close, for a market cap of 6bn.

2020 Debtwire

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