Concordia gains on equity stake chatter; Continental bonds firm on call news; Peabody on the rise

By Stephanie N. Rotondo

Seattle, Oct. 4 – The distressed bond market was mixed on Tuesday, though there was an upward lean.

Fresh news was helping Concordia International Corp. bonds head higher.

On Monday, it was reported that the Canadian pharmaceutical company was in talks for a potential equity stake. The discussions are being considered as an alternative, as talks regarding a leveraged buyout have not gotten anywhere.

Continental Resources Inc. was also firming up after the Oklahoma City-based oil and gas producer called $600 million of notes.

Elsewhere in the oil and gas space, bonds traded mixed in line with the broader market. For its part, domestic crude oil ended slightly better on the day, though it was weak for most of the session.

A trader saw Chesapeake Energy Corp.’s 8% second-lien notes due 2022 sliding almost half a point to 101 1/8, while California Resources Corp.’s 8% second-lien notes due 2022 gained a point to close at 68½.

Whiting Petroleum Corp.’s 5¾% notes due 2021 were meantime a shade higher at 95, according to a trader.

Concordia firms

Concordia International’s debt traded up on Tuesday, in the wake of news out on Monday that the company was considering selling a minority equity stake to a private equity firm.

A trader said the 7% notes due 2023 added a deuce to end at 70¼. The 9½% notes due 2022 improved over a point to 74.

Concordia has reportedly been looking for a potential buyer, but the United Kingdom’s proposal to stem exorbitant price increases on certain drugs may have put a damper on those efforts.

The latest buzz is that the company is opting instead to explore selling an equity stake. An influx of capital could help the company deal with its $3 billion debt burden.

Continental makes a call

Continental Resources’ 5% notes due 2022 added “almost 2 points,” a trader said Tuesday, with the bonds closing at 102 1/8.

The upward move came after the company said it was calling all of its $200 million of 7 3/8% senior notes due 2020 and $400 million of 7 1/8% senior notes due 2021.

The company plans to use proceeds from recent and pending asset sales to fund the call. Once completed, the total outstanding debt will be reduced to $6.6 billion, which compares to $7.2 billion as of June 30.

Peabody trades up

Peabody Energy Corp.’s debt was trading higher as well on Tuesday, as metallurgical coal prices hit recent highs.

A trader saw the 10% notes due 2022 popping 5 points to 48, while the 6¼% notes due 2021 added 1½ points to end at 27.

Another trader said the 10% notes firmed 4 points to trade with a 47 to 48 context, as the unsecured paper gained 2 points to 27 to 27½.

Yet another market source pegged the 6½% notes due 2020 at 27¾ bid, up 2½ points on the day.

Coal prices have been on the rise for the last several months, due in part to production curbs put in place by China. That has helped the coal sector – which has experienced a fair tide of bankruptcy filings – find a footing.

In particular, Peabody Energy’s bonds have been steadily climbing up as the St. Louis-based company works its way toward a Chapter 11 exit.

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