Primary still quiet as junk turns broadly higher; Valeant jumps on Walgreens arrangement

By Paul Deckelman and Paul A. Harris

New York, Dec. 15 – The high-yield market broke out of its recent rut on Tuesday, moving broadly higher, with some credits up by multiple points.

The upturn built on momentum seen in the latter part of Monday’s trading, when opportunistic buying at lower levels emerged following several previous sessions of pronounced weakness.

Multiple factors helped to spur Tuesday’s upturn, including a second straight session of stronger stocks and higher oil price as well as bullish comments by investment guru Bill Gross, who indicated this is a good time to take advantage of bargains in the oversold junk market.

The gains occurred as the Federal Reserve opened its final two-day meeting of the year, with the central bank widely expected to start gently bumping interest rates higher for the first time in nearly 10 years.

Among specific issues, Valeant Pharmaceuticals International, Inc.’s bonds were points higher across the drug maker’s capital structure on the news that Valeant has inked a distribution deal with Walgreens.

Primary activity meantime remained calm, with no new deals either announced or priced and a pair of prospective issues still in the market, although some participants believe new-deal activity is done for the year.

Statistical measures of junk market performance turned higher across the board on Tuesday after having been mixed on Monday and lower all around for five consecutive sessions before that. Tuesday’s rise was the first since Dec. 1.

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