Overall quiet in distressed market, although Valeant swings; Peabody decline continues; energy down

By Colin Hanner

Chicago, Dec. 15 – Trading was on the quiet side in the distressed markets on Thursday in contrast to the fluctuation earlier in the week, and much of the focus was on new issue trading in the regular high-yield arena, traders said.

Valeant Pharmaceuticals International Inc. saw intraday swings, tracking low in early morning trading before rebounding to close with mixed movement in several of its notes.

The Canadian-based pharmaceutical company’s chief executive officer said on CNBC that if there is interest for Valeant’s core business, the company would listen.

St. Louis-based Peabody Energy Corp. was mostly down, perhaps fueled by the uneasiness in spot coal prices or the momentum of the notes on the week, a trader said.

Oil slipped, albeit slightly, on Thursday, falling early on the rally of the dollar but rebounding to fall just below flat on the day. As a result, several oil and oil-related companies saw mixed movement, including California Resources Corp. and Transocean Inc., which were both down on the day.

Issues still acting on momentum from news in the past few sessions – iHeartMedia, Inc., J. Crew Group, Inc. and Neiman Marcus Group, Inc. – traded but did not see much movement.

Valeant swings down, then up

Much of Valeant’s movement was trending lower in mid-morning trading, a trader said, though it popped back to see some mixed movement in some of its most-actively traded notes.

Down as much as 2 points in the mornings, the notes gained some steam as the day progressed, fueled in part by Valeant’s chief executive officer Joe Papa’s comments in the late afternoon on CNBC, during which he said that the company would listen “at this time” if there was inbound interest for the business.

A trader said the 6¾% notes due 2018 were down ½ point to 94 7/8, and following with a similar ½ point decrease were the company’s 6 1/8% notes due 2025, which settled with a 74½ handle.

Valeant’s 5 7/8% notes due 2023 were up ¾ point to 74¾, a trader said, and rounding out the most actively traded were its 6 3/8% notes due 2020, up ¼ point to 84½.

A market source said the 7½% notes due 2021 were down 1¾ points to 84¾.

Another trader said the notes as a whole were down 1½ to 2 points on the day “depending on where you were in the cap structure.”

Other healthcare

A trader saw movement in Community Health Systems Inc.’s 8% notes due 2019, which were down 1¼ point to 82¼.

The 6 7/8% notes due 2022 traded but were unchanged at 69, the trader said.

Pharmaceutical company Endo International plc was also unchanged, though settled with an 88½ handle, another trader said.

Peabody on the decline

A day after Peabody obtained an extension of its exclusive periods for filing and soliciting votes on a Chapter 11 plan, its distressed notes continued to fall.

“I’m not sure if it’s general weakness in coal given with what’s spot pricing recently, but you could attribute it to that,” a trader said.

After Wednesday’s 2¾-point decline in the coal company’s 6¼% notes due 2020, they continued to trek downward.

A market source said they were down “about 1 point” to 70, while a trader had the notes trading around the 71 zip code.

The 10% notes due 2022 were trading at 92¾, up ¼ point, a market source said, while a trader said the notes were down by that much or more to 92.

In E&P

Oil fell on Thursday, as a rate hike by the Federal Reserve boosted equities, as well as the value of the dollar, prompting several exploration and production notes to follow.

California Resources’ 8% notes due 2022 were down 1 point to 88, a trader said, while another trader said the notes were down about 2 points to an 87 to 88 range.

A market source said the notes were down 2 points to 88½.

Plano, Texas-based Denbury Resources Inc.’ 6 3/8% notes due 2021 were down 1¾ points to 91, a market source said.

Driller Transocean Ltd.’s 6.8% notes due 2038 were down 1 point to 82, a trader said.

Noble Holding International Ltd., one of the biggest gainers on Wednesday, slowed on Thursday’s session in its 6.05% notes due 2041, which were down 1½ points to 73.

Seeing small increases was geoscience company CGG SA, whose 6½% notes due 2021 were up ¾ point to 46½, a market source said.

Oil and natural gas developer Memorial Production Partners LP’s 7 5/8% notes due 2021 were up ½ point to 42¼, a trader said, and Linn Energy LLC saw a similar ½-point gain in its 7¾% notes due 2021.

Retail movers

J. Crew Group, which is reportedly preparing for a possible debt restructuring, was down ¼ point in its 7¾% notes due 2019, which went out with a 41½ handle, a trader said.

And, following disappointing first quarter results, Neiman Marcus Group’s 8% notes due 2021 were down ½ point to 76.

Market round up

IHeartMedia’s 9% notes due 2022 were up 1 1/8 points to 74½, a trader said.

Luxembourg-based Intelsat Jackson Holdings SA’s 7¼% notes due 2020 were down ¼ point to 77½.

Rounding out idiosyncratic movers were Caesars Entertainment Corp.’s 10% notes due 2018, up 1/8 point to 70 1/8.

© 2015 Prospect News.
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