Distressed debt trading light post-holiday; Intelsat bonds better to unchanged; Valeant loan slides

By Stephanie N. Rotondo

Seattle, March 28 – With market players just returning from the long holiday weekend, distressed debt traders lamented a lack of liquidity in Monday trading.

The European markets also remained closed on Monday in observance of Easter.

“It’s pretty quiet,” one trader said. “Everyone is just coming back from a three-day weekend or spring breaks.

“The amount of bonds [trading] over $10 million in volume was pretty low,” he added.

For instance, Chesapeake Energy Corp.’s 8% second-lien notes due 2022 traded only a single time, the trader noted.

“That’s one that trades all the time,” he said.

He said the trade occurred at 51.

But even trading in domestic crude oil futures was said to be on the thinner side, despite prices dipping a shade to $39.43 a barrel.

Elsewhere in the commodity space, AK Steel Holdings Corp. bonds were trending higher, albeit in more-than-modest trading.

There was also no fresh news out to push the paper higher.

One trader said the 7 5/8% notes due 2021 were “pretty much unchanged” at 55¾. However, he said the 7 5/8% notes due 2020 were “maybe a smidge better,” trading “61-ish.”

At another desk, a market source placed the 2020 paper at 62 bid, up a point for the day.

That source also deemed United States Steel Corp.’s 7% notes due 2018 better by over a point at 90 bid.

Intelsat ‘kind of mixed’

A trader said Intelsat SA bonds “continue to trade,” though he called Monday’s performance “kind of mixed.”

He said the “LuxCo” bonds – such as the 7¾% notes due 2021 and the 8 1/8% notes due 2023 –“seem like they were inching a little bit higher,” trading “just below 30.”

He remarked that the rest of the company’s debt structure was “pretty much unchanged.”

On March 21, the Luxembourg-based satellite services provider – in fact, the provider that broadcast Neil Armstrong’s walk on the Moon – sold $1.25 billion of 8% notes due 2024. Proceeds from the offering will be used for general corporate purposes, which may include repayment or repurchase of Intelsat Jackson or Intelsat Luxembourg SA debt, including intercompany loans payable to Intelsat Luxembourg and its affiliates by Intelsat Jackson, and for working capital purposes.

But with a $15 billion debt load, Intelsat has been struggling to maintain or increase its revenue stream.

Still, the recently priced deal is hoped to improve the bottom line, at least in the near term.

Valeant loan falls

Valeant Pharmaceuticals International Inc.’s term loan F retreated in trading on Monday as reports surfaced that Michael Pearson, the company’s chief executive officer, received a subpoena to testify in April at a hearing held by the Senate Special Committee on Aging, which investigates drug price spikes, according to a trader.

The term loan F was quoted at 93¼ bid, 94 offered, down from 93½ bid, 94¼ offered, the trader said.

Last week, Valeant announced that it is looking for someone to replace Pearson as chief executive officer, but that Pearson will stay until a replacement is appointed.

The company has been under scrutiny for a while now due to allegations involving its relationship with Philidor and is in the process of reviewing related accounting matters and assessing the impact on financial reporting and internal controls.

As previously reported, the company has delayed filing its 2015 10-K because of the ongoing review.

The current filing deadline for the 10-K is March 30, and the company has 30 days, or until April 29, to cure the default by filing its 10-K. The current expectation is that the 10-K will be filed by April 29.

Valeant, a Laval, Quebec-based specialty pharmaceutical company, said last week that, to be cautious, it is seeking a waiver from credit facility lenders to extend its 10-K filing deadline and the filing of its 10-Q for the quarter ended March 31.

Sara Rosenberg contributed to this article.

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