Valeant down on post-asset sale, Trump; Murray Energy up; iHeart continues to be active ahead of auction

By Colin Hanner

Chicago, Jan. 11 – Activity in the distressed market played to a similar tune it had a day prior during trading on Wednesday, as trading continued to swirl around one of the most actively traded pharmaceutical names following an series of asset sales.

Valeant Pharmaceuticals International, Inc. swung downward after posting several gains across its securities during the previous session.

“Valeant took a little breather, bonds started trading off their recent highs,” a trader said. “There was lots of activity.”

A trader said the notes were dipping on post-asset sale news but also mentioned that president-elect Donald Trump’s comments during a press conference also had a factor in the movement.

Other pharmaceutical companies felt the effects of the Trump press conference, though not as actively as Valeant, a trader said.

In exploration and production, several names did not respond to the rising price of oil on the session and were, for the most part, rather unchanged to the movement. Among them, California Resources Corp. and Range Resources Corp. remained unchanged, while Chesapeake Energy Corp. was down.

Private coal company Murray Energy Corp. was truly active in the session for the first time this year, traders said.

Media and entertainment company iHeartCommunications, Inc. remained active, traders said, though there was not much significant movement in the notes.

Asset sale, Trump down Valeant

The Canadian pharmaceutical company announced late Monday and early Tuesday the sale of several of its brands and interests in deals totaling $2.1 billion, a dent in the $30 billion debt load the company currently has.

On Wednesday, bonds fell off their highs, in what amounted to a combination of dips off the momentum caused by the asset sale and remarks directed at the pharmaceutical industry by president-elect Trump.

A trader said the notes had already begun to trade off Tuesday’s highs before Trump took the stage late Wednesday morning and continued the pace after he had finished.

The 6 1/8% notes due 2025 – the “most actively” traded bond of the day, according to traders – were down 2½ points to 75¾, and the 5 7/8% notes due 2023 followed with a 2-point loss to 76 5/8, a trader said.

Valeant’s 6¾% notes due 2018 were down 1¼ points to 97¾, and the 5 3/8% notes due 2020 were down 1½ points to 88¾.

The president-elect’s rapid-fire condemnation of specific businesses and sectors – typically reserved for social media in recent weeks – came out in his first press conference in six months on Wednesday, this time against pharmaceutical drug companies.

Trump said he would create new bidding procedures for the drug industry, because “they're getting away with murder.”

“Pharma, pharma has a lot of lobbies, a lot of lobbyists and a lot of power,” Trump said during the press conference. “And there's very little bidding on drugs. We’re the largest buyer of drugs in the world, and yet we don't bid properly. And were going to start bidding, and we’re going to save billions of dollars over a period of time.”

Drug companies’ equity prices retreated immediately after the comments were made, including Valeant’s, which were down $1.07, or 6.52%, to $15.33.

Healthcare followers

Endo Finance Co. (Endo Pharmaceuticals plc) saw one of the day’s biggest hits in response to Trump’s comments.

A trader said its 6% notes due 2023 were down almost 3 points to 86¾.

Its stock price plummeted $1.30, or 8.49%, to $14.01.

Though Trump did solidify his position to repeal and immediately replace the Affordable Care Act with another plan during the press conference Wednesday, traders did not respond as actively as other headlines in the past.

Community Health Systems, Inc.’s 5 1/8% notes due 2021 were down ¾ point to 94¾, a market source said.

Murray on active side

Though traders were unable to gauge the reason behind Murray Energy Corp.’s movement on Wednesday, due to the fact the company is private and does not disclose information publicly, they did say that activity was “pretty active.”

The 11¼% notes due 2021 were up 1 point to 74 3/8, a trader said.

E&P mixed on oil’s ups

Though oil prices did advance amid news that refiners in the U.S. produced a record amount of crude last week, companies in distressed-land seemed rather impervious to the upward movement.

California Resources’ 8% notes due 2022 were unchanged at 89½, a trader said.

Mirroring the flat-line was Fort Worth, Texas-based Range Resources’ 5¾% notes due 2021, which remained at 105¼.

Denbury Resources’ 6 3/8% notes due 2021 were down ¼ point to 92½.

Mixed on the airwaves

Traders said the activity across a handful of communication companies were mixed on the session, especially iHeartCommunications, Inc’s 14% notes due 2021, which were down ¾ point to 34.

Another trader said they settled around a 34½ context, though the trader added that it was not necessarily out of the most recent trend.

“There’s nothing necessarily out news-wise, but they continue to be active,” ahead of an upcoming auction, the trader said.

Frontier Communications Corp.’s 11% notes due 2025 were down 3/8 point to 102½, a trader said.

And Stamford, Conn.-based Charter Communications, Inc.’s 6 5/8% notes due 2022 were up ¼ point to 104 1/8.

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