Mallinckrodt gains despite federal probe; McDermott notes hit new low in energy space

By James McCandless

San Antonio, Nov. 26 – During Tuesday’s session, distressed debt trading turned to newsmakers in pharma and energy.

Mallinckrodt plc’s notes rose despite news on Tuesday that the federal government has opened a criminal investigation into several drug makers and distributors.

The 4 7/8% senior notes due 2020 rose 2 points to close at 68¾ bid. The 5½% senior notes due 2025 picked up 1 point to close at 28 bid.

The gains for the Staines-upon-Thames, England-based drug producer came despite news out that the federal government has opened a criminal probe into whether it and other drug makers and distributors knowingly allowed opioids to flood the market, propagating an addiction epidemic.

Many names in the sector are already embroiled in litigation brought by thousands of cities and states from around the country with hopes that a blanket settlement is on the horizon.

“Some were thinking that the risk carried by all of this legal stuff was beginning to dissipate,” a trader said. “I think it’s too early to tell what effect the new probe has.”

In the energy space, McDermott International, Inc.’s paper dropped to a new low following news of new board members with bankruptcy experience.

The 10 5/8% senior notes due 2024 dipped 1½ points to close at 6½ bid.

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