High-yield market ends in ‘bloodbath’; recent new issues pressured; Valeant faces subpoena

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, Sept. 28 – One high-yield bond trader deemed the trading session “a bloodbath” on Monday.

“Everything was down 1 to 3 points, and there’s no bids,” he said. “There’s still some stuff trading, but there weren’t a lot of buyers.”

“A lot of stuff got slaughtered today,” another trader said.

The space was following the broader markets lower amid continuing economic uncertainty as well as concerns of a looming government shutdown if a budget fight cannot be avoided.

No new issues priced during the session.

In the secondary, recently priced deals from Olin Corp., Altice/Cablevision Systems Corp. and Frontier Communications Corp. were pushed around.

Valeant Pharmaceuticals International Inc. bonds were also being weighed on by news that Congressional Democrats are seeking a subpoena of documents related to price increases that occurred earlier this year.

But one trader noted that a fair bit of the day’s activity was centered on investment-grade names that were flirting with high-yield territory.

One such name was Glencore plc, whose stock hit a new low Monday amid a commodity sell-off. A trader said those bonds were off 8 to 10 points on the day.

Alcoa Inc. was another. The aluminum producer announced Monday that it plans to split itself into two companies. As a result, those bonds were off “some 10 to 12 points,” according to a trader.

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