California Resources ‘active’; Valeant sees little change; Brietburn creditors urge company to nix ‘risky’ plan

By Colin Hanner

Chicago, Oct. 14 – Though the market saw positive third quarter gains for heavyweights in the banking sector – as well as increased U.S. retail sales and producer prices – distressed debt remained relatively quiet, capping off a week of similar behavior.

“There weren’t many big movers [this week],” a trader said.

Wells Fargo, Citigroup and JP Morgan all posted higher third quarter profits than estimates had predicted. The latter two beat estimates on bond-trading revenue.

California Resources Corp.’s 8% notes due 2022 were down around “72½, [and] that might be a half point weaker,” a market source said.

“CRC was the biggest of any distressed names,” the source continued.

Per a market source, Valeant Pharmaceuticals International Inc. was not “overly active” and “pretty much unchanged.”

The 6 1/8% notes were trading “83¼ to 83½,” the source said.

Its 7½% notes due 2021 were up three-quarters of a point to 94½.

The company will release its third quarter results on Wednesday. The company’s stock, at $31 in August, has fallen 28 percent from its summer-end highs.

A new report said that the “much-needed recovery in the company's prescription-drug business simply isn't happening.”

Weekly movers update

Intelsat SA bonds were a “smidge softer,” a trader said, after seeing 1 to 2 point declines on Tuesday.

“The Jackson paper was probably down a half-a-point,” the trader said. The 7.5% notes were trading “around 75½.”

Avaya Inc. was “better again,” a source said.

The 7% coupon traded up to 78½, “up over a point.”

“I had seen those go out 77 bid last night,” the trader said.

The 10½% notes were “probably as good as 28 bidding,” noting that the last trade earlier in the week was “around 25.”

Nortel Networks Corp. was “much quieter.”

A market source said the 10¾ % notes were trading around 99½, up about a half point.

There was “nothing really new” about Alliance One International, a market source said. Its 9 7/8% notes due 2021 were “at 82½.”

Alliance announced a completion of an offering of $275 million in aggregate principal for 8½% first-lien notes due 2021, according to a press release.

Energized up

Peabody Energy Corp. took a break from movement during Friday’s session.

The 10% coupons due 2022 were “marginally better,” trading at 54¾, up from “maybe 55 to 55½” a market source said.

Its 6¼% s notes due 2021 were still “trading in the mid-30s.”

Breitburn Energy Partners LP was “pretty active around 63½, 64,” for its 8 5/8% notes due 2020. The trader noted it hadn’t traded in a few days but was up “about a point.”

News around Breitburn came about today when an official committee of unsecured creditors called on the company to abandon its “risky” business plan and negotiate with the unsecured group, including holders of $1.1 billion of unsecured notes, per a report in Prospect News’ Distressed Debt Daily.

If the company doesn’t abandon its strategy, the committee wants the bankruptcy court to deny its requested exclusivity extension. A hearing on the extension is scheduled for Oct. 27.

“I think that was behind some of the activity,” a market source said.

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