Valeant Pharma loses, then surges; healthcare down; oil bonds follow OPEC speculation

By Colin Hanner

Chicago, Nov. 1 – Distressed debt-land echoed the dismal declines of equities on Tuesday – through continuing oil declines and supply cut talks – though news for Valeant Pharmaceuticals International Inc. provided a jolt in late afternoon trading.

On Monday, Valeant went under the microscope after reports surfaced that its ex-chief financial officer and former chief executive officer are the subjects of a criminal probe relating to possible accounting fraud.

The company’s stock fell 12% that day but rebounded more than 30% Tuesday afternoon after a report came out saying it may sell Salix Pharmaceuticals, its gastroenterology and endocrinology medical company, to Takeda Pharmaceuticals for $10 billion.

A trader said Valeant notes were “flying” on Tuesday after the news.

“Hospital and healthcare bonds continued to drift,” a market source said on Tuesday, news that furthered a pattern since late last week when Community Health Systems Inc. announced disappointing preliminary quarterly results.

A trader saw the 8% notes due 2019 down 1¾ points to 85.

After taking a nosedive on Monday, oil continued its slump Tuesday to its lowest levels in more than a month amid uncertainty surrounding the Organization of Petroleum Exporting Countries’ ability to come to a consensus about supply cuts later this month in Vienna.

California Resources Corp.’s 8% notes due 2022 traded down 1 point to 67½, a trader said.

Dropping for the second-straight day was Linn Energy, whose 7¾% notes due 2021 were down 3¼ points to 30½.

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