Concordia International takes 10-point hit as U.K. aims at price gouging; Peabody debt ends strong

By Stephanie N. Rotondo

Seattle, Sept. 16 – Concordia International Corp. was the nom du jour in the distressed debt market on Friday, as the company’s bonds declined about 10 points.

One trader noted that there were “oodles and oodles of trades” in the debt following news the United Kingdom introduced new legislation that would prevent drug companies from massively increasing drug prices.

As it related to Concordia, the Canadian drugmaker was singled out in the U.K. earlier this year for doing just what the bill is hoping to stem. The company’s U.K. unit has a variety of specific generic drugs to which there are few, if any, competitors. That allowed Concordia to increase the price of one of its drugs – eyedrops for bacterial conjunctivitis – by 14 times.

In the wake of the news, the bonds were “down big,” a trader said.

The trader called the 7% notes due 2023 off 9 points at 65, while the 9½% notes due 2022 dropped nearly 9½ points to 68 7/8.

Another trader noted that the debt was down as much as 15 points during the session, though the paper went out closer to 10 points weaker.

He saw the 9½% notes trading into the high-60s and the 7% notes dipping into the mid-60s from the mid-70s previously.

This isn’t the first time Concordia has faced troubles. Just last month, the company’s equity took a major downturn after revenue guidance was slashed by 16%. Concerns about the company’s debt burden and chatter that there would be no merger partner to save the day have also played a role in the company’s decline.

Peabody firms

Away from Concordia, the distressed market continued to show interest in Peabody Energy Corp.

There was still no fresh news out on the bankrupt coal producer, though its bonds have been on a bit of a rollercoaster for the last few weeks. One factor playing a role is the gradual improvement of coal prices, though that did not explain why the bonds had been trading weaker earlier in the week.

In Friday trading, the debt was moving back up again, continuing the trend from Thursday.

A trader saw the 10% notes due 2022 jumping nearly 6 points to 39¼, as the 6% notes due 2018 ticked up a touch to 24¾.

“That name continues to be pretty active,” another trader said. He called the 10% notes “up a couple more,” trading with a 39 handle. The unsecured notes were placed in a 24½ to 25 context.

Also in the coal arena, Murray Energy Corp.’s 11¼% notes due 2021 were seen unchanged at 43.

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