Parker Drilling mixed on bankruptcy; Mallinckrodt level after FDA rejects drug

By James McCandless

San Antonio, Dec. 12 – Volume in the distressed market saw a boost in the Wednesday session.

Parker Drilling Co.’s notes were mixed after the company filed for Chapter 11 bankruptcy on Wednesday.

Elsewhere in oil, a slight dip in oil futures was matched by mixed results for California Resources Corp.’s issues and gains for Ensco plc and Weatherford International plc’s paper.

Meanwhile, Mallinckrodt plc’s notes ended level after news broke early Wednesday that one of its drugs did not gain Federal Drug Administration approval.

In finance, Deutsche Bank AG’s issues improved amid a downward trend spurred by a series of negative headlines.

Telecom name Intelsat SA’s paper was positive while Frontier Communications Corp.’s notes fell.

Hexion Inc.’s issues were also higher.

Parker Drilling mixed

Parker Drilling’s notes ended the session mixed, traders said.

The 7½% notes due 2020 gained 2½ points to close at 62 bid. The 6¾% notes due 2022 lost 3 points to close at 51½ bid.

On Wednesday, the Houston-based drilling services provider made a pre-packaged Chapter 11 bankruptcy filing after reaching a restructuring support agreement with a significant number of bondholders, Prospect News reported.

After the news broke, Standard & Poor’s lowered the company’s issuer credit rating and issue-level ratings.

“Those bonds were all over the place today,” a trader said. “They were hard to pin down right up until the end.”

The company’s notes had already drifted further into distressed territory in early October after reporting a $2.99 per share loss for the third quarter.

Oil names still trading

Meanwhile, slight losses in oil futures were accompanied by mixed results for California Resources’ bellwether issues.

The company’s 6% notes due 2024 picked up 2 points to close at 71 bid. The 8% notes due 2022 slipped 1 point to close at 76½ bid.

London-based contract driller Ensco’s paper improved.

Its 4½% paper due 2024 added 1 point to close at 74 bid. The 7¾% paper due 2026 rose ¾ point to close at 82¼ bid.

Baar, Switzerland-based sector peer Weatherford’s 9 7/8% notes due 2024 picked up ½ point to close at 66¾ bid. The 7¾% notes due 2021 gained ¼ point to close at 82½ bid.

On Wednesday, West Texas Intermediate crude oil futures lost 50 cents, closing at $51.15 per barrel. North Sea Brent crude futures fell 5 cents to $60.15 per barrel.

Mallinckrodt level

Mallinckrodt’s issues ended the day level, market sources said.

The 4¾% notes due 2023, which traded as low as 70½ bid intraday, ended the session at about 73 bid, according to Trace data.

The Staines-Upon-Thames, U.K.-based drug maker received some negative attention Wednesday after news broke that the FDA had rejected approval of an abuse-deterrent version of its opioid Roxicodone.

The development was seen as a blow to a company that has come under increased scrutiny for its product’s role in the growing prevalence of opioid abuse in the United States.

Separately on Wednesday, chief executive officer Mark Trudeau stated in a conference call that the company has paid off $700 million in debt since the first quarter as a result of significant cash flow generation.

Management has also committed to continue reducing its debt in 2019.

Recently, the company announced that it would be spinning off its generic drug business to shareholders by the middle of 2019.

Deutsche Bank higher

Deutsche Bank’s paper saw a boost, traders said.

The 4 7/8% paper due 2032 shot up 3 points to close at 81 bid.

The Frankfurt-based bank’s paper stemmed a negative slide amid news Wednesday that the German government is considering several options to make a merger easier with peer Commerzbank.

The bank has received a slew of negative headlines recently after German authorities raided the company’s corporate headquarters in connection with a money laundering investigation.

After trading in the high 80s context for most of the year, negative attention has caused the paper to trend downward.

Intelsat rises, Frontier down

In the telecom space, Intelsat’s notes were gaining.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 added ¼ point to close at 88¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 rose 1¼ points to close at 81¼ bid.

“There’s a bit of a revolving door in telecom, it feels like,” a trader said. “Today it looks like Intelsat caught the market’s attention.”

Norwalk, Conn.-based sector peer Frontier’s issues went negative.

The 7 5/8% notes due 2024 dropped ½ point to close at 55¼ bid. The 10½% notes due 2022 shaved off ¼ point to close at 75½ bid. The 11% notes due 2025 fell ¾ point to close at 67¼ bid.

Hexion gains

Hexion’s paper saw a boost Wednesday, traders said.

The 6 5/8% paper due 2020 added ¼ point to close at 82½ bid. The 9% paper due 2020 gained 1¼ points to close at 52 bid.

“It’s trading every day, but there haven’t been any recent developments,” a trader said.

The Columbus, Ohio-based chemicals producer’s paper has been under pressure since news broke that second-lien noteholders are organizing in preparation for future talks with the company over $2.4 billion in debt scheduled to mature in 2020.

© 2015 Prospect News.
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