New and existing Valeant bonds busy and better; Cal Res, other oils higher; Intelsat bonds seen off

By Paul Deckelman

New York, Dec. 5 – Traders in distressed debt and the bonds of otherwise underperforming companies or sectors said that activity in their market was restrained on Tuesday, taking a back seat to the veritable flood of new issuance in the broader high-yield bond market.

But one name that did stand out was that of debt-laden Canadian drug manufacturer Valeant Pharmaceuticals International, Inc.

Its huge new offering of eight-year notes, which had priced on Monday, was easily the most active issue of the day in the junk precincts, trading twice as much as the next closest credit.

And the company’s existing notes were also among the day’s Most Active issues and were seen higher on the session pretty much across the board.

Elsewhere, traders saw continued strength in California Resources Corp.’s energy sector benchmark issue and other oil and natural gas exploration and production companies such as EP Energy Corp.

The recently often underperforming communications sector was better, including names like Windstream Services and Altice NV.

But communications satellite operator Intelsat SA’s bonds were seen losing altitude.

Valeant deal dominates Actives list

Traders said that Valeant Pharmaceuticals International’s new 9% notes due 2025 was easily the volume leader during Tuesday’s session, with more than twice as many having traded as the next most active issue.

“Tons of it traded,” one market source said, seeing the new bonds push up to around the 100 1/8 bid level.

A second trader saw the notes a little below that, at 99 7/8 bid, but said they were “trading okay,” noting that the Laval, Que.-based drug manufacturer had priced its quickly shopped $1.5 billion on Monday at a discounted 98.611 price, yielding 9.25%, after the megadeal was upsized from an originally announced $1 billion.

At another desk, a trader saw the bonds a little above 100 3/8 bid, calling that a gain of more than ¼ point.

He estimated volume in the new deal at a breath-taking $145 million traded on the day.

Existing Valeant bonds busy

While the new Valeant bonds were the toast of the market, the company’s existing paper was not forgotten by investors.

A trader said that the existing bonds were “busy – but the [capital] structure was relatively unchanged, with no big movements.”

For instance, Valeant’s 6 1/8% notes due 2025 edged up by 1/8 point to close at 87 ¾ bid, with over $31 million traded.

Other Valeant issues firmed a little bit more than that, another trader said, seeing its 5 7/8% notes due 2023 up ¼ point on the day at 89¼ bid, while its 7½% notes due 2021 gained 3/8 point to end at 100 3/8 bid, both on around $20 million of volume.

And its 5 /8% notes due 2021 gained nearly ½ point on the day to 95 7/8 bid, with around $10 million traded.

Energy names improve

Away from the activity in Valeant, a trader noted that California Resources Corp.’s benchmark 8% notes due 2022 “was very active again,” quoting the Los Angeles-based exploration and production company’s paper up nearly 1 point on the day.

At another shop, those bonds were seen up by 13/16 point on the day, at 78 9/32 bid, with over $28 million traded.

Houston-based sector peer EP Energy’s 9 3/8% notes due 2020 closed at 78 bid, up 1¼ points on the day.

Those oil and gas credits have lately been on the rise, whether or not crude oil prices were also rising; on Monday, the bonds had firmed even though crude got crunched for the first time after two straight gains before that.

On Tuesday, though, January-delivery West Texas Intermediate crude gained 15 cents a barrel in New York Mercantile Exchange trading, ending at $57.62, while the February North Sea Brent crude contract firmed by 41 cents per barrel in London futures trading, to settle at $62.86.

Telecom trading better

Some of the recently beleaguered telecommunications credits were seen better on Tuesday.

A trader said that Little Rock, Ark.-based wireline provider Windstream Services’ 7½% notes due 2023 gained 1½ points on the day, ending at 70¼ bid.

A second trader saw its 6 3/8% notes due 2023 closing at 68¾ bid, calling that a ¼ point gain on the day.

A trader noted that several of Netherlands-based telecom and cable provider Altice’s issues were higher “on pretty heavy volume” for something not a new deal.

He saw its 7¾% notes due 2022 up 1¼ points, at 97½ bid, with over $27 million having traded.

Its 7 5/8% notes due 2025 were ½-point gainers, at 92 ¾ bid, on over $22 million of volume.

And he said that rise also extended to the company’s France-based SFR Group, whose 7 7/8% notes due 2026 advanced by 7/8 point on the day, to 102 bid, with around $20 million traded.

Intelsat loses altitude

However, a trader said that there was “some weakness across Intelsat’s [capital] structure – about 1¼ points,” although he did not see any fresh news out on the Luxembourg-based communications satellite company that might explain the drop.

Another trader quoted the company’s most active issue, its 9¾ % notes due 2025 down 1 1/8 points, at 95 1/8 bid, on $10 million of volume.

He also said that its 7¾% notes due 2021 lost 1¼ points, to end at 56½ bid, while its secured 7½% notes due 2021 were ¾ point down at 91¾ bid.

© 2015 Prospect News.
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