Valeant trades active, better; Tronox debt pushes higher; energy space, Intelsat end with mixed tone

By Stephanie N. Rotondo

Seattle, July 20 – Valeant Pharmaceuticals International Inc. was again notable in the distressed debt market on Wednesday, as it was announced that the struggling drugmaker had received approval on two of its drugs.

One drug is believed to be a $1 billion opportunity for Valeant.

The news resulted in a trading surge in the company’s debt, all toward the positive side.

Meanwhile, Tronox Ltd.’s 6 3/8% notes due 2020 had “a bunch of trades,” a trader said. While there was no fresh news out on Wednesday, the chemical maker did announce on Friday the departure of its chief financial officer.

“You don’t see that one too often,” the trader noted.

Among the typical go-to distressed names, the energy space was again trading mixed as crude oil prices ticked up modestly.

California Resources Corp., for instance, was lower on the day.

A trader said the 8% second-lien notes due 2022 fell nearly 1½ points to 70. He also saw the 6% notes due 2024 dipping a point to 51.

A second trader said the 8% notes “traded down a point” to 70.

Chesapeake Energy Corp.’s 8% second-lien notes due 2022, however, were deemed slightly better at 89 – though its 6 5/8% notes due 2020 were called half a point weaker at 73½ bid.

Domestic crude oil ended with a slightly better tone on Wednesday, as the U.S. Energy Information Administration reported that refinery operations were higher than expected.

Away from energy, Intelsat SA paper “keeps trading,” a trader said.

He said the 8% notes due 2024, as well as notes linked to the Intelsat Jackson Holdings SA unit, were “up a little more, maybe about half a point.”

But another trader saw the bonds heading in the opposite direction, calling the 7¾% notes due 2021 half a point lower at 22½.

The trader also said the 7¼% notes due 2019 dipped nearly that amount to 71 1/8.

Valeant gets a boost

Valeant Pharmaceuticals’ debt was trending up on news it had received not one, but two approvals for new drugs.

A trader called the 6 1/8% notes due 2025 1½ points higher at 83 7/8, while the 5 1/8% notes due 2023 improved a point to 84.

The trader also said the 5 3/8% notes due 2020 inched up almost half a point to 89 5/8.

Valeant, the Canadian drug company that has struggled amid accounting probes, said late Tuesday that the U.S. Food and Drug Administration had given approval to an oral form of Relistor, a treatment for opioid-induced constipation associated with noncancer pain, as well as on brodalumab, a plaque psoriasis drug.

Relistor, for its part, could generate up to $1 billion for the company, analysts are projecting.

In an investor call on Wednesday, activist investor Bill Ackman touted the developments, as well as the company’s overall research and development strategy.

“People have mischaracterized Valeant’s R&D programs,” Ackman said. “This company has one of the most productive R&D programs of any pharmaceutical company in the country.”

Tronox on the rise

Tronox bonds were moving up in midweek trading, though there was no fresh news to cause the gains.

However, the company did announce last week that its CFO would be leaving the company.

A trader said the 6 3/8% notes due 2020 added almost a point to close at 81.

Another trader said the debt was “up over a point” at 81. He also pegged the 7½% notes due 2022 at 80.

In an 8-K filed with the Securities and Exchange Commission on Friday, the Stamford, Conn.-based chemical company said that Katherine Harper planned to exit her post in order to pursue other career opportunities.

Her resignation will be effective Sept. 30. Until then, Harper will stay with the company as an external search for a new CFO is done.

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