Mallinckrodt notes rise on second-quarter earnings beat; Valaris up in energy space

By James McCandless

San Antonio, Aug. 4 – Distressed debt trading focused on the pharmaceutical and energy sectors on Tuesday.

Mallinckrodt plc’s notes rose during the session after beating expectations for its second-quarter earnings report.

The 5 5/8% senior notes due 2023 gained 2½ points to close at 18¼ bid. The 5¾% senior notes due 2022 tacked on 3 points to close at 20½ bid.

On Tuesday morning, the Staines-upon-Thames, England-based pharmaceutical producer released its second-quarter earnings results.

The company reported earnings per share of $1.89 per share, better than the analyst consensus of $1.25 per share.

Revenues came in at $700.9 million, also beating analyst expectations.

The company also said that a write-down for one of its most popular products, ongoing opioid litigation, its existing debt and other pressures may force it to file for Chapter 11 bankruptcy.

“The stock was getting shredded, though the bonds were better,” a trader said.

In the energy space, Valaris plc’s paper gained ground after amending its credit agreement and its forbearance agreements on several notes.

The 7¾% senior notes due 2026 added ¼ point to close at 6¼ bid. The 5¾% senior paper due 2044 pushed up ½ point to close at 6 bid.

The issuer is a London-based contract driller.

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