Teva higher as settlement reached; LSC Communications declines on downgrade

By James McCandless

San Antonio, July 29 – The distressed space continued to be driven by newsmakers as a new week started.

Teva Pharmaceutical Industries Ltd.’s notes closed higher as the company and three others reached a settlement with California over delayed competition allegations.

Sector peer Endo International plc, also part of the settlement, saw its issues gain.

Print services name LSC Communications, Inc.’s paper declined after receiving a ratings downgrade in the wake of a canceled merger.

Meanwhile, Dean Foods Co.’s notes fell after the company announced the appointment of a new chief executive officer.

Telecom name DISH Network Corp.’s issues declined as the market anticipated its after-market earnings release.

Intelsat SA, another telecom name, saw its paper diverge.

In energy, oil futures rose as Range Resources Corp.’s and Southwestern Energy Co.’s notes declined and Superior Energy Services, Inc.’s issues were almost flat.

Teva, Endo higher

Drug maker Teva’s notes closed Monday activity higher, traders said.

The 3.15% senior notes due 2026 picked up 1 point to close at 78 bid. The 4.1% notes due 2046 rose 1¾ points to close at 67¼ bid.

On Monday, Attorney General Xavier Becerra of California announced that the Petach Tikva, Israel-based generic drug name would pay $69 million to the state in a settlement involving three other pharma names.

The state had argued that the company had allegedly deliberately delayed releasing generic alternatives to two drugs into the marketplace in order to keep prices high.

“This is the tip of the iceberg,” a trader said. “General consensus is that they will be paying these kinds of settlements out regularly in the short term.”

In June the company reached an $85 million settlement with Oklahoma over its alleged role in the propagation of the opioid crisis.

Following the settlement, several analysts argued that the name would have to pay out hundreds of millions to settle similar matters.

Dublin-based sector peer Endo, also part of the settlement, saw that its issues were also gaining.

The 6% senior notes due 2023 gained 1¾ points to close at 63 bid.

LSC lower

Elsewhere, LSC’s paper declined, market sources said.

The 8¾% senior secured paper due 2023 fell 1¼ points to close at 75¼ bid.

The Chicago-based business printing services name received a downgrade from S&P Global Ratings early Monday.

The agency downgraded the company to CCC+ from B-, lowered its issue-level ratings and affirmed a negative outlook.

S&P cited the company’s terminated merger with sector peer Quad/Graphics, asserting that its reliance on a strong overall market is detrimental in a sector prone to weakness.

Last week, the two companies called the $1.4 billion merger off after the U.S. Department of Justice filed an antitrust lawsuit.

Dean Foods falls

Food name Dean Foods’ notes spent the day falling, traders said.

The 6½% senior notes due 2023 dipped 1¼ points to close at 56 bid.

After the close on Friday, the Dallas-based dairy products producer announced that it had replaced resigning CEO Ralph Scozzafava with Eric Beringause.

The company has been exploring strategic financial alternatives since May when it reported a dismal first-quarter earnings report highlighted by declining sales in the face of increasing competition.

“Most likely there will be asset sales,” a trader said. “When that’s coming is not clear.”

DISH off, Intelsat mixed

Telecom name DISH’s issues fell during the session, market sources said.

The 2.375% senior notes due 2024 slid 1½ points to close at 92 bid.

The Englewood, Colo.-based pay-TV provider’s structure continued to be in focus on Monday as the market anticipated its second-quarter earnings release after the close.

Last week, news of the approved merger of telecom giants Sprint and T-Mobile brought benefits for DISH, as the name struck a $5 billion deal to buy prepaid mobile and spectrum assets from them.

The purchase was a crucial part of the Department of Justice’s approval of the merger.

Luxembourg-based satellite provider Intelsat’s paper diverged.

Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 fell ¼ point to close at 92 bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 improved by ¼ point to close at 79¼ bid.

Oil names dip

As energy futures rose, distressed sector tranches moved in separate directions, traders said.

Fort Worth-based independent oil and gas producer Range Resources’ notes declined.

The 5% senior notes due 2023 fell ¾ point to close at 87½ bid. The 4 7/8% notes due 2025 moved down 2¾ points to close at 82 bid.

Spring, Texas-based sector peer Southwestern Energy’s issues also moved negatively.

The 7¾% senior notes due 2027 lost 1¼ points to close at 87½ bid. The 6.2% notes due 2025 dropped ¾ point to close at 86 bid.

Houston-based oilfield services provider Superior Energy’s paper stayed nearly flat.

The 7 1/8% senior paper due 2021 held level at 68 bid. The 7¾% paper due 2024 dipped ¼ point to close at 57 bid.

West Texas Intermediate crude oil futures for September delivery added 67 cents to settle at $56.87 per barrel.

North Sea Brent crude oil futures for September delivery finished the session at $63.71 per barrel after rising 25 cents.

© 2015 Prospect News.
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