Valeant better as guidance affirmed; Walter Investments pops on sales; Guitar Center wanes

By Stephanie N. Rotondo

Seattle, Aug. 9 – Fresh headlines continued to drive distressed credits on Tuesday.

Perhaps most notable was Valeant Pharmaceuticals International Inc., which in addition to announcing second-quarter results said that it would reorganize itself.

The Canadian drugmaker – which has been plagued by accounting issues and governmental and regulatory investigations – also reaffirmed its yearly guidance, giving investors hope that the company could reach its targets.

Bonds gained 4 to 5 points in response to the news.

Meanwhile, a series of strategic transactions were helping push Walter Investment Management Corp.’s debt into higher territory. A sale of mortgage servicing rights and other assets gave investors something else to focus on aside from the company’s weak earnings report.

Among the day’s losers, Guitar Center Inc.’s 6½% notes due 2019 were under pressure during the session.

It wasn’t clear what caused the decline, though the Los Angeles-based musical instrument retailer did announce that Darrell Webb, chief executive officer, was planning to retire.

Ron Japinga, currently president of the company, will take over the role in the “coming days,” the company said.

“It might be that there is a little uneasiness at the top,” a trader speculated on possible reasons why the debt fell in trading.

He pegged the notes at 87¾, off over 2 points.

Another trader said the debt was down 2 to 3 points, trading with an 87 handle.

Also in the retail world, rue21 Inc.’s 9% notes due 2021 were seen rising 3 points to 37½.

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