Valeant clobbered as report alleges fraud; other pharmaceuticals fall; oil credits lower

By Paul Deckelman

New York, Oct. 21 – Valeant Pharmaceuticals International Inc.’s already beleaguered bonds swooned in heavy trading Wednesday after a report by a trading firm that specializes in selling short against target companies alleged that the Canadian drug manufacturer was using Enron-style accounting tricks to artificially and fraudulently swell its revenues, a charge that Valeant denied.

Valeant’s bank debt was also seen on the slide, as were its shares, which fell sharply for a third consecutive session.

Valeant’s troubles, along with recent political criticism of the drug industry, caused other biotechnology and pharmaceutical credits to fall, including Endo International plc and Mallinckrodt plc.

Those drug sector woes also knocked Concordia Healthcare Corp.’s new eight-year notes lower for a second consecutive day. The latter company’s deal had priced on Tuesday and then immediately traded down sharply.

In the convertibles market, Horizon Pharma plc’s 2.25% convertibles were “swinging all over the place” but ultimately ended down a point or two points on swap, traders said.

Traders said that the falling pharmaceuticals dominated things in the distressed market and in the larger high-yield market on Wednesday.

Away from the drug makers, energy names such as California Resources Corp. and Chesapeake Energy Corp. continued to lose ground as crude oil prices plunged again, as the latest U.S. government figures showed that domestic oil production increased despite recent industry cutbacks in drilling activity.

© 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.