Pre-holiday distressed market trading quiet; recent Valeant up; Cobalt convertibles continue gyrations

By Paul Deckelman

New York, Dec. 22 – Trading in the debt of distressed issues and otherwise underperforming companies and sectors was quiet and subdued on Friday, in an abbreviated session ahead of the Christmas holiday break.

Among the more familiar issues, Canadian drug manufacturer Valeant Pharmaceuticals International, Inc.’s recently priced eight-year notes were firmer, in what passed for reasonably active trading on a very quiet day.

Community Health Systems Inc.’s bonds were seen mixed, though with only a few million dollars’ worth of trading between them.

In the convertibles market, the trading frenzy surrounding Cobalt International Energy Inc.’s 2.625% convertible notes due 2019 and 3.125% convertible notes due 2024 continued.

Valeant issue moves up

Valeant Pharmaceuticals’ 9% notes due 2025 were seen having firmed in what a market source called “relatively decent volume” for an otherwise quiet day of around $7 million.

He saw those notes closing at 105 bid, up 3/8 point.

The Laval, Que.-based drug manufacturer had priced $1.5 billion of those bonds at 98.611 back on Dec. 4, yielding 9.25%.

That quick to market offering priced after having been upsized from an originally announced $1 billion.

It moved up quickly from its discounted issue price, topping the par level later on that same session, and continued to gradually firm over the days and weeks that followed to reach its current levels in a 104½-to-105 bid complex.

Community Health paper seen mixed

Traders saw Community Health Systems Inc.’s 6¼% secured notes due 2023 up ¼ bid on the day at 90¼ bid.

But the Franklin, Tenn.-based hospital operator’s unsecured 6 7/8% notes due 2022 lost ¼ point on the day to close at 57¾ bid. Both issues traded around $3 million each.

Cobalt gyrations continue

In the convertibles market, Cobalt International Energy’s ’s 2.625% and 3.125% notes have dominated trading activity since the bankrupt petroleum and natural gas exploration company announced a $500 million settlement for its interests off the coast of Angola on Wednesday.

That trading frenzy continued on a quiet Friday before the Christmas break.

After weakening on Thursday, both notes made nominal gains on Friday.

Cobalt’s 3.125% notes traded as low as 21.8 before ending Friday’s session at a high of 25.75, according to Trace data. Cobalt’s 2.625% notes traded down to 23.9 but ended the session at 25.5.

The notes were trading in the 10 to 11 range in the run up to Wednesday’s announcement.

Investors are now looking to the amount the Houston-based company’s Gulf of Mexico property is worth to determine how much they will receive in the distribution of the company’s assets, a market source said.

Abigail W. Adams contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.