Teva lower on continued scrutiny; Chaparral Energy drops after downgrade

By James McCandless

San Antonio, May 15 – The distressed space’s focus for Wednesday landed at the feet of pharmaceutical and energy names.

Teva Pharmaceutical Industries Ltd.’s notes were lower in the aftermath of negative headlines and legal action surrounding the company.

Elsewhere in the sector, Endo International plc’s issues were similarly under pressure.

In the energy space, Chaparral Energy, Inc.’s paper dropped after a ratings downgrade.

Sector peers Ensco Rowan plc’s and California Resources Corp.’s notes were mixed while Superior Energy Services, Inc.’s issues fell despite improvement in oil futures.

Meanwhile, Hexion, Inc.’s paper closed mixed as it won court approval to enact its restructuring plan.

Telecom name Intelsat SA’s notes were similarly mixed as its push to open up the C-band spectrum gains traction.

Dean Foods Co.’s issues ended the day trending negative.

Teva, Endo under pressure

Teva’s notes moved lower in Wednesday activity, traders said.

The 4.1% notes due 2046 lost 1¼ points to close at 68¼ bid. The 3.15% notes due 2026 also fell by 1¼ points to close at 79¼ bid.

The Petach Tikva-based generic pharmaceuticals producer continues to trade in a negative light after news broke on Monday that 44 states had filed a lawsuit against it and 19 other drugmakers for their alleged participation in a price fixing scheme.

The states allege that the group colluded to reduce competition and increase prices in certain drugs.

The company continues to deny any wrongdoing.

“They’re getting killed by negative headlines,” a trader said. “And it’s not necessarily weakening other drug names, just the ones involved with generics.”

Dublin-based sector peer Endo’s issues were similarly under pressure.

The 6% notes due 2023 gave back 2 points to close at 76 bid.

Chaparral drops 6¾ points

In oil and gas, Chaparral’s paper saw a significant drop, market sources said.

The 8¾% paper due 2023 dropped 6¾ points to close at 58 bid.

On Wednesday, S&P Global Ratings issued a downgrade on the Oklahoma City, Okla.-based independent oil and gas producer.

The agency lowered its issuer credit rating, lowered its issue-level rating on its unsecured notes and affirmed a negative outlook.

S&P said that its downgrade is a reflection on the company’s weakened liquidity position apparent in its first-quarter earnings report.

Last week, the company reported a 5 cents per share loss, slightly wider than the expected 2 cents per share loss.

Oil tranches mixed

Popular oil names saw mixed results despite improvements in oil futures, traders said.

London-based contract driller Ensco Rowan’s notes ended mixed.

The 7¾% notes due 2026 took off 2¼ points to close at 82 bid. The 5.2% notes due 2025, despite dipping to 74½ bid during the day, closed level at 75¾ bid.

Los Angeles-based producer California Resources’ issues were also mixed.

The 6% notes due 2024 declined by 1½ points to close at 61½ bid. The 8% notes due 2022 added 1½ points to close at 79½ bid.

Houston-based oilfield services provider Superior Energy’s paper dipped.

The 7 1/8% paper due 2021 lost 1¾ points to close at 80¾ bid.

West Texas Intermediate crude oil futures for June delivery saw a modest 24-cent rise, ending the session at $62.02 per barrel.

North Sea Brent crude futures for July delivery closed at $71.77 per barrel following a 53-cent gain.

Hexion mixed

Elsewhere, Hexion’s notes also saw a day with varied results, market sources said.

The 6 5/8% notes due 2020 tacked on ½ point to close at 79½ bid. The 9% notes due 2020 shed 1 point to close at 18 bid.

The Columbus, Ohio-based bankrupt chemicals producer won approval to proceed with its restructuring support agreement in bankruptcy court, Prospect News reported.

The support agreement sets the terms of a consensual financial deleveraging plan.

A group of creditors representing all tranches agreed to the plan.

Intelsat also mixed

Meanwhile, in telecom, Intelsat’s issues also saw mixed activity, traders said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 closed level at 90 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 fell 1 point to close at 76 bid.

This week, the Luxembourg-based satellite operator has seen an upward push after its efforts to have the United States government open up use of the C-band spectrum appeared to be gaining steam.

Two senators influential in telecommunications legislation and a commissioner with the F.C.C. have made a push in recent days to expedite the approval of widening use of the spectrum to include mobile providers.

Dean Foods down

Dean Foods’ paper saw a dip by the session’s end, market sources said.

The 6½% paper due 2023 lost 1¾ points to close at 62 bid.

The Dallas-based dairy product producer continues to conduct a strategic alternatives review that includes finding a buyer after a string of negative earnings reports.

The company has fallen out of favor in recent months as it continues to post losses, though some saw a respite in its cost-cutting measures.

© 2015 Prospect News.
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