Valeant call fails to improve bonds; new Jarden notes hold premium in quiet Monday trading

By Paul A. Harris

Portland, Ore., Oct. 26 – An early Monday conference call that Valeant Pharmaceuticals International Inc. held with investors failed to boost its bond prices in the initial aftermath of the call, according to a trader based in New York.

Valeant Pharmaceuticals’ 6 3/8% senior notes due Oct. 15, 2020 were “pretty active,” trading in the context of 89˝ bid, said the trader.

Late last week they were at 90˝ bid, 91 offered, the source added.

Valeant held the call to address issues raised when short seller Citron Research called into question Valeant’s business and accounting practices, as well as Valeant’s business relationship with Philidor Rx Services, LLC.

The issues, which were raised in a Citron report titled “Valeant: Could this be the Pharmaceutical Enron?” and published on Oct. 21, sent Valeant bond prices tumbling.

Prior to Citron’s report, the Valeant 6 3/8% notes due 2020 were trading in the high 90s to around par, the trader remarked.

ETFs firm

High-yield ETFs were flat to slightly higher at mid-morning Monday.

The iShares iBoxx $ High Yield Corporate Bd (HYG) were 7 cents better at $85.90 per share.

SPDR Barclays High Yield Bond ETF (JNK) were trading at $36.61 per share, up a penny.

Jarden above par

Among recent issues, Jarden Corp.’s 5% senior notes due Nov. 15, 2023 (Ba3/BB) were trading at a notable premium to their issue price.

The New York trader had the new Jarden 5% notes at 102 bid, 102˝ offered.

Another trader based on the East Coast of the United States had the bonds at 101 5/8 bid, 102 3/8 offered.

The deal came at par in a $300 million issue last Wednesday.

Meanwhile the new Concordia Healthcare Corp. 9˝% senior notes due Oct. 21, 2022, a $790 million hung deal which the dealer priced last week at par and subsequently re-marketed at significant discounts, were at 96˝ bid, 97˝ offered on Monday, according to a trader, who added that the notes were believed to have been re-marketed at around 96.

Primary quiet

There was no news on the new issue front in the early going on Monday, sources said.

The American Energy – Permian Basin, LLC $560 million offering of five-year senior secured first lien notes, which was scheduled to price during the middle part of last week but was subsequently pushed into the present week, continues to be shrouded in “radio silence,” sources said.

The deal was initially being guided in the 9% area but was subsequently said to be undergoing a process of price discovery, possibly moving talk into the double digits, sources added.

Given reasonably supportive market conditions, the final week of October could see as many as three to five deals, a trader said.

Meanwhile cash flows for dedicated high-yield funds were positive on Friday.

High-yield ETFs saw a robust $504 million of inflows on the day.

The ETFs were buyers on Monday morning, according to a trader who tracks the funds closely and who added that the Monday morning activity could represent residual piece-buying carried over from last week.

Asset managers, meanwhile, saw $155 million of inflows on Friday.

© 2015 Prospect News.
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