Valeant drops with Q3 announcement on horizon; Nortel up after settlement; Alliance leaks after deal

By Colin Hanner

Chicago, Oct. 13 – The start of the third quarter earnings season, coupled with the release of the Federal Reserve’s minutes on Wednesday and Chinese exports plunging, seemed to weigh on distressed debt activity on Thursday.

Per a morning report of Prospect News’ High Yield Daily, Valeant Pharmaceuticals International Inc.’s 5 7/8% notes due in 2023 were bidding at 83 at the midmorning on Thursday; on Wednesday, they were trading at 85, a trader said.

At close on Thursday, the 6 3/8% notes due 2020 were down about a point to 92, a market source said. The 6 1/8% note were down a point as well to 83½, and the 5 7/8% notes were trading down “around a point” around 83½, the source said.

The company’s 7½% notes due 2021 were the market’s key loser on the day, down 1¾ points to 94.25.

The announcement of the company’s third quarter results are on the horizon – Oct. 19 – and its movement could be a shift before they are released.

More concrete news surrounding Valeant came out of a report that claims a lead poisoning drug produced by Valeant had its price increased by 2,700% in a single year. Similar cases for other pharmaceutical companies whose price hikes have come to light in the past year have had adverse effects.

A trader pointed to the possible “lag effect” for companies like Valent and Endo International plc in which some traders “may take a day or two to get to the market and sell it.”

“There might be some selling pressure ahead of concerns for lower numbers,” the trader said.

Energy mixed

Peabody Energy Corp. continued to swing during trading on Thursday.

The 10% notes were trading around 55, “down about a point,” which the trader credited to “profit taking more than anything.”

Oil prices rose early despite OPEC accords to cut supply failing to solidify and the rising supplies continuing to pour in.

WTI and Brent crude were both positive on the day, tipping over $50 per barrel.

Linn Energy Corp. 7¾% due 2021 printed at 27½, up ½. CGG SA’s 6½ % notes saw a ¼ uptick to 50.

California Resources Corp.’s 8% notes due in 2022 dropped 1½ to 72½. Stone Energy Corp.’s 7½% notes dropped ½ to 58.

Alliance active

There was a “fair amount of activity” in Alliance One International Inc., a market source said. The company’s 9 7/8% notes due 2021 were down a little bit, trading around 82¼ to 82½, the source continued.

“That one has been leaking ever since they did that new secured deal,” the source continued.

The deal was announced on Oct. 6, which debuted a senior secured first lien note due 2021 in the amount of $275 million with an annual 8½% interest rate

Up and up

Avaya Inc. was up on two of its notes on the day.

Its 7% coupon was trading up “about a point” to 77, one trader said, and its 10½ % notes were “up about 2 points from last print” to 27½.

“No particular news there, per se,” the trader said

The same trader pointed to Nortel Networks Corp., a company that is “not really distressed prices, but it is sort of a stressed/distressed name.”

The company’s 10% notes were up around the “99 level.”

Nortel’s eight-year legal battles that resulted in the liquidation of what remains of the company’s $7.3 billion bankruptcy was finally laid to rest after debtors came to a deal.

© 2015 Prospect News.
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