Valeant falls on federal probe, oils off with crude; Fortescue gains on debt buyback, cost-cutting

By Paul Deckelman

New York, Oct. 15 – Valeant Pharmaceuticals International, Inc.’s bonds and shares plunged in heavy trading on Thursday on the news that the Canadian drug manufacturer – already facing congressional scrutiny over its controversial pricing policies for some of its medications – has been issued subpoenas by the United States Attorneys in New York and Boston who are also seeking details on its patient assistance programs, drug pricing and distribution practices.

Also on the downside were energy names such as California Resources Corp. and Energy XXI Ltd., which lost ground along with the latest slide in crude oil prices after data showed U.S. oil stockpiles growing.

Other losers in the sector included Penn Virginia Corp., Berry Petroleum Co. and Magnum Hunter Resources Corp.

Traders expected that Thursday’s late-session announcement of Advanced Micro Devices Inc.’s third-quarter slide into the red will pull its battered bonds down in Friday dealings.

On the upside, Fortescue Metals Group Ltd.’s bonds firmed smartly after the Australian iron ore producer reported continued progress in cutting its costs in the face of weak iron ore prices – and said that it had taken advantage of lower prices for its bonds to buy back a sizable chunk of its debt.

In the convertibles market, traders reported activity in foreign exchange services company FXCM Inc., whose paper fell after it reported weaker key customer trading metrics for September.

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