Trump presidency trickles down for upticks, several industries decline; energy, pharma up; hospitals lose

By Colin Hanner

Chicago, Nov. 8 – After an unprecedented and dramatic U.S. election that ended early Wednesday morning, bonds in distressed debt-land reacted to the market’s expectations of a Donald Trump presidency, particularly in sectors that would benefit, or lose, from the president elect’s platform.

“Certain sectors were really ripped around today,” a trader said. “A lot of companies were afraid of Donald [Trump] repealing Obamacare.”

Among those that felt the effects were hospital groups Community Health Systems Inc. and Quorum Health Corp., which both saw steep declines in several notes.

One trader saw a 7-point decline for Community Health’s 6 7/8% notes due 2022, which settled at 70.

The 7 1/8% notes due 2020 were down “7 points and change” to 74, and rounding out the hospital group were the 8% notes due 2019, which were down 8 points to 79¾.

Quorum Health saw similar losses in its 11 5/8% notes due 2023, which were down 7 points to 61½, a trader said.

On the flipside of the healthcare sector were pharmaceutical companies that had worries eased after knowing that a Democratic White House would not pursue legal action regarding price controls, a practice that companies like Valeant Pharmaceuticals International Inc. has been accused of in the past.

“[Pharmaceuticals] were up in the face of all of this,” a trader said, referring to the steep declines seen in other sectors.

Valeant, which is coming off a weak third-quarter earnings report on Tuesday, rebounded even amid all their distressing internal news.

The company’s 7½% notes due 2021 were up 3½ points to 89¼, a market source said, and settling near those levels were the 6 3/8% notes due 2020, which were up 2 points to 88.

Lastly for Valeant were the 6 1/8% notes due 2025, which rose 2½ points to 77¼, and its 5 1/8% notes due 2021, down 2¼ points to 92¾, according to a market source.

Similarly struggling with internal turmoil after posting quarterly results is Concordia International Corp., but that didn’t keep its notes from rising on Wednesday.

The 7% due 2023 were up 1½ to 39, a market source said, and settling just north of that handle were the 9½% notes due 2022, which were up 1¼ points to 42.

Concordia’s 9% notes due 2022 were up 3½ points to 86½, a trader said.

Lock them up

Areas such as coal companies and pharmaceutical groups made big gains in the day’s trading, but GEO Group Inc., a corrections, detention and mental health treatment company based out of Boca Raton, Fla., saw an uptick in its notes due to speculation that a Trump presidency would bring about the need for private prison facilities for illegal immigration population.

A market source saw the 5 1/8% notes due 2023 up 5¾ points to 94¼.

The rebound for several private prison groups comes after the mid-August decision from the Obama administration to discontinue the use of private prisons.

Drill, baby, drill

Trump won in states where coal production is at its highest — Wyoming, West Virginia, Kentucky and Pennsylvania — and the effect on coal-producing companies was sizeable, especially for St. Louis-based Peabody Energy Corp.

The 6½% notes due 2020 were “up around 5 [points] on the day,” a trader said, and settled around a 54½ handle. Another market source had the same notes at 55, up 4½ points on the day.

St. Clairsville, Ohio-based Murray Energy Corp. bounced up 2½ points to 77¾, a trader said.

VanEck Vectors Coal ETF, which attempts to replicate the overall performance of companies involved in coal, was up 33 cents, or 2.44%, to $13.86 and had seen trading in the low-to-mid $14 range.

Iron ore miner Cliffs Natural Resources Inc. was up 1 point to 76 in its 6¼% notes due 2040, a trader said.

Natural gas and oil producers and explorers also saw increases on Wednesday, as speculation about a more hands-off White House injected some renewed optimism that land would be more openly available to extraction and fracking.

A market source had CGG SA’s 6½% notes due 2021 were up 1¼ points to 38¼.

California Resources Corp. was up 2 points to 70 in its 8% notes due 2022, a trader said. A market source had the notes up only ½ point to 69.

EP Energy saw movement in its 9 3/8% notes due 2020, which saw a modest ½ point increase to 76¼, a trader said.

Rounding out the energy sector was GenOn Energy, Inc., which saw upticks in its 9½% notes due 2018 up a ¾ point to 74.

GenOn’s 7 7/8% notes due 2017 were “up almost 2 points” to 76¾, a trader said.

Erickson backlash

Erickson Inc., which filed for Chapter 11 under the U.S. Bankruptcy Code Tuesday in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, saw a 2-point downswing in its 8¼% notes due 2020 that settled at 36, a market source said.

The company is seeking interim access to $49 million of the term loan.

“Unfortunately, Erickson is not immune to the numerous business challenges currently facing the helicopter industry which have placed downward pressure on operating results and asset values,” Jeff Roberts, president and chief executive officer, said in the company press release.

Round up

iHeartCommunications Inc., or Clear Channel Outdoor Holdings, Inc., released its earnings on Wednesday, and, as a result, saw its 14% notes due 2021 trade up 1¼ point to 38¼.

Intelsat SA’s Jackson-linked 7½% notes due 2021 were up “about a point” to 74 1/8, a trader said.

A trader saw downward movement in Neiman-Marcus Group Inc.’s 8% notes due 2021, which were down 2 points to 77¾.

Susanna Moon contributed to this review.

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