Valeant most active in lulling distressed land; idiosyncratic names make moves in both directions

By Colin Hanner

Chicago, Dec. 19 – The distressed arena saw no substantial uptick in activity on Monday from the previous session, several traders said, and activity of any sort was low in volume.

“There weren’t too many things trading with any kind of volume,” a trader said.

“It’s kind of a typical Monday,” another trader said, adding that the most-actively traded distressed name was one of Valeant Pharmaceuticals International Inc.’s distressed notes, which saw eight total trades.

Mixed movement characterized the Canadian pharmaceutical company during the session.

Headlines from fellow pharmaceutical company Concordia International Corp., as well as gaming and entertainment company Caesars Entertainment Corp., creeped into the news, though there was not much activity from either, traders said.

Though falling for different reasons, iHeartMedia, Inc. and Peabody Energy Corp. continued to weaken on Monday, the first possibly falling to a ruling with the International Swaps & Derivatives Association, the latter perhaps mirroring the spot prices for coal.

“Hopefully it doesn’t do this all week, though it looks like we’re in for a snoozer,” a trader said, referring to the quietness in the market with the upcoming holiday week ahead.

Valeant mixed

Though there did not seem to be anything driving the movement behind Valeant Pharmaceuticals, it did see mixed movement – and the most active movement in one of its securities in all of the distressed market, according to one trader – during Monday’s session.

The 5 5/8% notes due 2021 were up ¼ point to 77 on eight total trades, the highest of the day, a trader said. The 6 1/8% notes due 2025 were down ¼ point to 77 on a “half-dozen trades.”

Rounding out its notes were the 6 3/8% notes due 2020, which were up 1/8 point to 84¾.

In other healthcare

On Monday, Concordia International Corp. announced a few updates about its business, including an announcement that it had made a £72 million cash-on-hand payment for its October 2015 acquisition of Amdipharm Mercury Ltd. from Cinven.

With that payment, the company said it still has sufficient liquidity to meet its near-term financial obligations.

The company also announced it will terminate the trial for a photodynamic therapy drug, as well as eliminate a contract sales team as part of the “company’s ongoing evaluation of its business.”

Concordia’s shares were up 17 cents, or 7.91%, to $2.32.

In its distressed bonds, the 7% notes due 2023 were up 5/8 point to 31 5/8, a trader said.

Another trader agreed on the handle and added that there was not a lot of trading that occurred.

Hospital operator Community Health Systems, Inc.’s 6 7/8% notes due 2022 were down 1/8 point to 68½.

Caesars trending lower

Caesars Entertainment received notice from creditors claiming to hold a majority of the claims under the first-lien bank debt incurred by bankrupt wholly owned subsidiary Caesars Entertainment Operating Co., Inc. alleging breaches of covenants and obligations set in a second amended restructuring support and forbearance agreement.

According to an 8-K filed Monday with the Securities and Exchange Commission, the notice specifically alleges that property company first-lien credit agreement documents are “materially inconsistent” with the support agreement and unacceptable to the majority bank creditors.

A trader said that though the headlines might have caused the trading during the session, there wasn’t that much traded.

“Things were quoted wider and lower, but there was not that much trading,” a trader said, adding the second-lien notes were trending around a 60 handle after being as high as 70 in recent times.

Peabody falling with coal

Spot prices for coal continue to weaken, a trader said Monday, adding that the downturns in prices may be affecting the downward trends associated with the St. Louis-based Peabody Energy.

The 10% notes due 2022 fell to a 69½ to 70 zip code, a trader said, about a ½-point decrease from previous levels.

iHeart waiting on ruling

According to a trader, iHeartMedia is still waiting to hear a ruling from the International Swaps & Derivatives Association on the media company’s most recent decision to skip the $57.1 million of 5½% senior notes and whether it is a “failure to pay” and whether the non-payment constituted a “restructuring credit agreement,” according to a report from Bloomberg.

That news has seemed to shape the overall movement in its distressed notes in recent sessions, a trader said, adding that iHeart’s 14% notes due 2021 were “much quieter” on Monday, trading in the 39½ to 40 context.

Another trader said that the news surrounding iHeart did not have much to do with the 9% notes due 2019, which were unchanged at 80, the trader said.

Mixed-bag roundup

In energy, California Resources Corp.’s 8% notes due 2022 were unchanged at 88¾, a trader said.

Allentown, Pa.-based Talen Energy Corp.’s 4.6% notes due 2019 were up ¼ point to 84, a market source said.

Offshore driller Ensco plc’s 5.70% notes due 2044 were down 2¾ points to 74¼.

And Noble Energy Holdings, Inc.’s 5¼% notes due 2021 were down 1 point to 67½. Its higher-rated high-yield bonds were some of the most actively traded in the high-yield space, a trader said.

Outside of energy, Intelsat Jackson Holdings SA’s 7¼% notes due 2019 were up ¼ point to 84.

Caroline Salls 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.