PetSmart, Mattel fall again; MEG Energy off on legal claim; new, existing Valeant paper eases

By Paul Deckelman

New York, Dec. 14 – The distressed debt market was lower on Thursday, in line with a generally weaker broader high-yield bond market, according to traders in in the paper of underperforming companies and sectors.

Investors were saying “been there, done that” as the notes and bonds of familiar issuers PetSmart, Inc. and Mattel Inc. continued to move lower for yet another session. Toymaker Mattel, recently downgraded to junk by all three major ratings agencies, was meantime on the verge of pricing a $1 billion issue of eight-year notes.

In the oil and natural gas sphere, MEG Energy Corp.’s paper fell across the board after one of the entities in a long-running legal claim against the company filed an amended claim against MEG, which dismissed the whole issue as frivolous.

On the other hand, EP Energy Corp.’s notes firmed smartly on Thursday as it announced sweetened terms for an ongoing exchange offer for some of its existing bonds that is now under way.

Debt-laden Canadian drugmaker Valeant Pharmaceuticals International Inc.’s recently priced eight-year notes as well as its existing paper were all seen lower.

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