Valeant bonds improve as probe concludes; iHeartMedia maintains; energy space moves lower

By Stephanie N. Rotondo

Seattle, April 5 – The distressed debt space was treading water Tuesday, as investors again favored recently priced high-yield issues over bonds linked to struggling credits.

However, there were a few more active spots in the space, driven by fresh news.

Valeant Pharmaceuticals International Inc. saw its bonds get “a little bit of a bounce” after the board committee investigating issues related to the company’s relationship with Philidor found no new issues.

As such, Valeant said that it would not need to restate its financials any more than it already has.

Meanwhile, iHeartMedia Inc. bonds were following the day’s trend, as a court hearing regarding a potential default went into its second day.

“There was a little bit of activity, but it seems to be in line with where it has been trading,” a trader said.

The oil and gas arena was on the weaker side, even as domestic crude ticked up a touch for the day. The gains came as Kuwait said a production freeze could move forward without Iran’s participation.

A trader saw Oasis Petroleum Corp.’s 6 7/8% notes due 2022 fall almost a point to 73. He also pegged Chesapeake Energy Corp.’s 3.872% notes due 2019 at 36½, off almost a point.

Valeant pushes higher

A trader said Valeant Pharmaceuticals’ bonds “rebounded” in the wake of news a board committee had completed its investigation into the company’s relationship with Philidor.

The board found no new issues, which should allow it to file its most recent financials on or before April 29.

The trader placed the 6 1/8% notes due 2023 at 78½, up over a point. The 6¾% notes due 2018 rose a like amount to 92 1/8.

“Both on pretty decent volume,” the trader said.

He also saw the 7½% notes due 2021 at 86, up nearly 2 points for the day. The 6 3/8% notes due 2020 ticked up a deuce to 85¾.

Another trader said the 6 1/8% notes were “pretty active,” gaining 1½ points to close “around the 79 level.” The 6¾% notes were “also fairly active,” trading up to a 92½ to 93 context.

Post the restatement news, the term loans E and F were quoted at 94¾ bid, 95½ offered, up from 94 bid, 95 offered, the term loans C and D were quoted at 95 bid, 95¾ offered, up on the bid side from 94¾ bid, 95¾ offered, and the term loan A3 was quoted at 95½ bid, 96½ offered, up from 95¼ bid, 96¼ offered, the trader added.

Then, later in the day, the debt continued to rise as investors were told of changes to the company’s proposed amendment, including the addition of a leverage-based pricing grid and requirements for more deleveraging than originally planned, another trader remarked.

That trader was quoting the term loans E and F at 95¾ bid, 96½ offered by late day.

Valeant will be pushing to get its financials out by the end of month. If it fails to do so, lenders could push a default on the company’s $30 billion of debt.

iHeart holds its ground

iHeartMedia paper was steady to slightly higher on Tuesday, as a court hearing on a potential default went into its second day.

“I think I saw some ETFers get involved in that,” a trader said.

The trader saw the 9% notes due 2019 and the 14% notes due 2021 end unchanged at 77 and 24, respectively. The 9% notes due 2021 inched up a quarter-point to 71¼, as the 10% notes due 2018 added almost a point to 33¼.

The hearing to decide whether San Antonio-based iHeartMedia wrongfully transferred assets to a subsidiary began in Texas on Monday.

The creditor group that brought that lawsuit included Franklin Mutual, Franklin Advisors, Canyon Capital and D.E. Shaw.

On Dec. 3, iHeart moved $516 million of equity in Clear Channel Outdoor Holdings to Broader Media LLC, a newly-formed subsidiary. In early March, creditors issued notices of default to the company, alleging that the transfer resulted in a default under the indentures.

iHeart, however, claimed that the transfer was perfectly above-board. In an effort to squash the default talk and comes to terms on dealing with the company’s $20 billion in debt, talks with creditors began.

On Monday, the multimedia company said those talks were terminated. Without any agreement from the discussions, the hearing got underway.

Sara Rosenberg contributed to this article.

© 2015 Prospect News.
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