New Valeant bonds again busy, Claire’s Stores climbs on results; Tronox tumbles; oil names slide with crude

By Paul Deckelman

New York, Dec. 6 – Traders in distressed debt and the bonds of otherwise underperforming companies or sectors said that activity in their market remained relatively quiet on Wednesday for a second straight session, as trading in new issues continued to dominate the broader high-yield bond market.

Stressed Canadian drug manufacturer Valeant Pharmaceuticals International, Inc.’s big new offering of eight-year notes remained among the Most Actives.

Away from the new deals, traders saw Claire’s Stores, Inc.’s bonds firm smartly after the specialty retailer reported favorable fiscal third-quarter results.

On the downside, chemical maker Tronox Ltd.’s bonds were battered as the Federal Trade Commission moved to challenge its planned acquisition of fellow titanium dioxide producer Cristal.

Energy names such as California Resources Corp. and EP Energy Corp. fell sharply, in line with a steep slide in world crude oil prices.

Valeant paper slips

A trader said that Valeant Pharmaceuticals International’s new 9% notes due 2025 “lost a little ground,” seeing the notes at 99¼ bid, which he called down 5/8 point on the day.

But he noted that even though the bonds had eased, they were “still better than where they had priced.”

The debt-laden Laval, Que.-based drug manufacturer had priced its quickly shopped $1.5 billion offering at 98.611 on Monday, to 9.25%, after that deal was massively upsized from an originally announced $1 billion.

But another trader saw them a little bit better than that at 99¾ bid, calling that only a 1/8 point loss.

More than $27 million had traded on Wednesday.

Claire’s climbs after numbers

Elsewhere, a trader said that Claire’s Stores’ bonds “were up again,” gaining more than 1 full point on the day to end in a 65-to-66 context “after they posted some decent earnings.”

He had also seen those 9% notes due 2019 up by several points on Tuesday, when the numbers were reported.

Another market source said the bonds had improved by as much as 1¾ points Wednesday to end at 65½ bid, with over $24 million traded.

Claire’s a Hoffman Estates, Ill.-based retailer specializing in jewelry and other accessories aimed at young women, teens, tweens and kids, said that in the fiscal 2017 third quarter ended Oct. 28, net sales rose to $314.6 million, an increase of $2.5 million, or 0.8% compared to the year-ago period, although that was largely due to the favorable effects of foreign currency exchange rate changes.

Its consolidated same-store sales – the retailing industry’s key economic metric – increased 1.1%, with North America same-store sales increasing 2.4%, although Europe same-store sales decreased by 1%.

Adjusted EBITDA in the fiscal 2017 third quarter was $42.4 million, an increase of $5.4 million, or 14.8% compared to the fiscal 2016 third quarter.

Tronox trades off on FTC move

On the downside, a trader said that Tronox Ltd.’s 5¾% notes due 2025 “were more active today after the news that the FTC is trying to block its Cristal acquisition.”

He saw those notes down 1½ points, at 102½ bid.

Another trader quoted them at 102 3/8 bid, down 1 5/8 points on the day, with around $9 million having changed hands.

The Stamford, Conn.-based manufacturer of titanium dioxide was in retreat on the news that the Federal Trade Commission has filed a complaint aimed at stopping its previously announced purchase of the titanium dioxide business of Cristal, a chemical company owned by Saudi Arabia-based National Industrialization Company and National Titanium Dioxide Company Limited.

The federal agency is concerned that allowing the $1.67 billion deal to go through would give Tronox too great a share of the market for titanium dioxide, a chemical pigment used in making paint, plastic, paper and other products.

Tronox, in a statement, decried the federal move as unjustified.

Energy names fall with crude

Oil and natural gas exploration and production company names were lower Wednesday after crude oil prices slid on news of an unexpectedly large buildup of U.S. gasoline supplies, which could depress future demand for the oil.

Los Angeles-based California Resources Corp.’s benchmark 8% notes due 2022 plunged by more than 1½ points on the day, ending just under 76½ bid, with over $13 million traded.

Houston-based sector peer EP Energy’s 9 3/8% notes due 2020 were seen off 1 point on the day at 77 bid, on over $17 million of volume.

January-delivery West Texas Intermediate crude fell by $1.66 a barrel in New York Mercantile Exchange trading, ending at $55.96, while the February North Sea Brent crude contract swooned by $1.64 per barrel to $61.22 in London futures trading on Wednesday.

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