Mallinckrodt notes fall on short seller tweets; Alta Mesa down on third-quarter report

By James McCandless

San Antonio, Nov. 26 – A new week in the distressed market turned attention toward the pharmaceutical, health care and telecom sectors. Energy names continued to be in focus.

Mallinckrodt plc’s notes declined after a short seller made claims about the effectiveness of one of its popular drugs.

Elsewhere in the medical space, Community Health Systems, Inc.’s issues rose.

Meanwhile, in energy, Alta Mesa Holdings, LP’s paper continued a precipitous drop after the company reported its third-quarter earnings.

Offshore aviation names Bristow Group Inc.’s and PHI, Inc.’s notes traded up after competitor Waypoint Leasing Holdings Ltd. filed for bankruptcy.

Sable Permian Resources LLC’s issues continued to slide.

Sanchez Energy Corp.’s paper rose with oil futures.

The day also saw a drop for Altice Europe NV while Intelsat SA’s and Frontier Communications Corp.’s notes improved.

Genworth Financial Inc.’s issues saw a negative trend amid doubts of regulatory approval for a Chinese takeover.

Mallinckrodt falls

Mallinckrodt’s notes declined Monday, traders said.

The 4¾% notes due 2023 lost ¾ point to close at 81¼ bid.

On Monday, the Staines-Upon-Thames, U.K.-based drug maker came under scrutiny after short seller Citron Research claimed that Acthar, one of the company’s best sellers, had failed a clinical trial.

“It’s only one study that they’re referencing, so this is probably just a bump in the road unless other studies show the same thing,” a trader said. “Right now it looks like they just want the stock price to come down.”

Elsewhere in the health care space, Community Health’s issues traded up.

The 7 1/8% notes due 2020 picked up 1 point to close at 85¼ bid. The 6 7/8% notes due 2022 gained 2¾ points to close at 48¾ bid.

Last week, the Franklin, Tenn.-based hospital operator sold a handful of its properties as part of its debt reduction plan.

Energy in focus

In energy, Alta Mesa’s paper fell, market sources said.

The 7 7/8% paper due 2024 shaved off 2 points to close at 72 bid.

The Houston-based midstream energy services name saw a slump after a less-than-stellar third-quarter report.

The company showed net income of $7.1 million for the quarter and EBITDA of $10.9 million.

“That was pretty disappointing,” a trader said. “That paper just continues to slide.”

Trading around the 90 context just last month, the 7 7/8% paper has fallen around 20 points, according to Trace data, as the market anticipated weak results.

Meanwhile, Bristow Group’s notes were rising.

The 6¼% notes due 2022 added 1½ points to close at 58½ bid.

The Houston-based offshore aviation name’s notes improved amid news that competitor Waypoint Leasing filed for bankruptcy.

“I would expect that to come back down,” a trader said. “If anything, Waypoint’s bankruptcy has exposed some of the weakness in the space.”

Lafayette, La.-based peer PHI’s 5¼% notes due 2019 rose 1 point to close at 85 bid.

PHI’s notes have been on a downward trend since the company terminated a cash tender offer for the $500 million outstanding of its 5¼% notes, only receiving commitments for $400 million.

Houston-based independent oil and gas producer Sable Permian Resources’ 7 1/8% paper due 2020 fell 2 points to close at 40¼ points.

Sanchez Energy’s notes gained with oil futures.

The 6 1/8% notes due 2023 rose 1 point to close at 34 bid.

West Texas Intermediate crude oil futures picked up $1.18 to close the session at $51.60 per barrel. North Sea Brent crude ended at $60.48 a barrel after a $1.68 rise.

Altice lower

Altice’s issues dropped, traders said.

The 7 5/8% paper due 2025 lost 1¾ points to close at 78 bid.

The Amsterdam-based telecom provider put out its third-quarter results last week.

The company reported a jump in cable television subscribers in France and remained confident about growth in the next year, while the market remained wary of a 6.1% fall in revenue and a 10.4% reduction in EBITDA.

Luxembourg-based sector peer Intelsat’s paper rose.

Intelsat Jackson SA’s 5½% paper due 2023 edged up ¼ point to close at 88¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 jumped 3 points to close at 82½ bid.

Norwalk, Conn.-based wireline telecom name Frontier’s notes also saw gains.

The 7 5/8% notes due 2024 added 1¾ points to close at 56¾ bid. The 10½% notes due 2022 gained 1 point to close at 77½ bid. The 11% notes due 2025 rose 1¼ point to close at 70 bid.

Genworth declines

Genworth’s issues moved down, market sources said.

The 4.619% bonds due 2066 lost 4 points to close at 58 bid.

The Richmond, Va.-based insurance provider saw negative sentiment in the market as doubts continued to be cast on whether its acquisition by China Oceanwide would be approved by regulators.

“They’ve been in this limbo for a while,” a trader said. “People are starting to think that the deal’s going to come apart.”

© 2015 Prospect News.
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