Energy deals move up along with crude; Valeant paper pops; Community Health notes rebound

By Paul Deckelman

New York, Dec. 8 – For what seemed to be the umpteenth time this week, traders in distressed debt and in the bonds of otherwise underperforming companies and industry sectors said that Friday’s market was mostly quiet, with investor attention in the broader high-yield bond world mostly focused on new or recently priced issues.

Traders saw firmer levels on energy credits like California Resources Corp., Jones Energy Holdings LLC and Denbury Resources Inc., in line with a second straight day of firmer crude oil prices.

Valeant Pharmaceuticals International, Inc.’s recently priced new deal was seen up solidly and the drug manufacturer’s existing issues were also firmer.

Also in the healthcare space, hospital operator Community Health Systems, Inc.’s notes were mostly better after having been universally lower on Thursday.

And recently pressured wireline telecommunications names like Frontier Communications Corp. were mixed on the session.

Energy credits climb

Traders said that the energy sector was stronger Friday, in line with renewed strength in world crude oil prices, which rose for a second straight session.

California Resources’ 8% notes due 2020 gained ¾ point to close at 77¼ bid.

Jones Energy’s 6¾% notes due 2022 gained 1¼ points, ending at 73.

Denbury Resources’ 9% notes due 2021 ended at 100 1/8 bid, up 7/8 point on the session.

The rise coincided with a second straight gain in world crude prices, with January-delivery West Texas Intermediate ending the day up 67 cents per barrel on the New York Mercantile Exchange dealings to settle at $57.36.

February-delivery North Sea Brent jumped by $1.20 per barrel in London futures trading, finishing at $63.40.

New Valeant issue active

A trader said that the recently priced new offering from Valeant Pharmaceuticals was the most actively traded junk bond of the day, with over $41 million changing hands.

He said that those 9% notes due 2025 were finishing the day at 100¾ bid, calling that a 1¼ point jump from prior levels.

The Laval, Que.-based drug manufacturer priced $1.5 billion of the notes at 98.611 this past Monday to yield 9.25%.

Valeant’s existing 5 7/8% notes due 2023 meantime firmed to 90½ bid, a gain of 1¾ points.

Community Health comeback

A trader noted that Franklin, Tenn.-based hospital operator Community Health Systems’ notes “seemed to be doing better” Friday, after having slid by 1½ to 2 points across the capital structure on Thursday.

Its 8% notes due 2019 were quoted ¼ point higher at 86¾ bid while its 7 1/8% notes due 2020 improved to 77 bid, up 3/8 point.

However, its 6 7/8% notes due 2022 remained weak, losing another ½ point to close at 57 bid, “sinking to a new low,” a trader said.

Telecom trades mixed

The recently battered telecom sector was seen ending mixed on Friday, with Frontier Communications’ 10½% notes due 2022 firming by 1 1/8 points to 79¾ bid.

However, its 6¼% notes due 2021 lost ¾ point on the day, ending at 74½ bid.

Sector peer CenturyLink, Inc.’s 7% long bonds due 2039 likewise lost ¾ point, ending at 83.25 bid.

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