Mallinckrodt continues slide in pharma space; J.C. Penney up amid executive stock buys

By James McCandless

San Antonio, Aug. 30 – The distressed debt space saw light trading ahead of the Labor Day weekend.

Mallinckrodt plc’s notes continued to slide in the pharmaceuticals space as the market continues to react to its drawing down of its remaining capital in its revolving credit facility.

Sector peer Teva Pharmaceutical Industries Ltd.’s issues saw diverging movements.

Meanwhile, in retail, J.C. Penney Co., Inc.’s paper gained amid news of several executives making large purchases of common stock.

Bed Bath & Beyond Inc.’s notes gave back some of Thursday’s gains.

Though oil futures fell, Valaris plc’s issues ended higher while California Resources Corp.’s and Whiting Petroleum Corp.’s paper varied.

Despite a ratings downgrade, CBL & Associates Properties, Inc.’s notes improved.

In utilities, PG&E Corp.’s debt issues capped the week trending higher.

Mallinckrodt declines

Mallinckrodt’s notes continued to slide, traders said.

The 4¾% senior notes due 2023 dropped 3½ points to close at 35½ bid. The 5½% senior notes due 2025 crashed 10½ points to close at 44 bid.

On Thursday, the 4¾% notes dropped 9¾ points.

The Staines-upon-Thames, England-based drug maker announced on Wednesday that a subsidiary drew down the remaining $95 million of available funds in its revolving credit facility.

The market reacted to the news by sending the company’s structure further into distressed territory.

The week has seen increased scrutiny on the sector as companies reckon with the potential amounts they might have to pay in settlements related to the opioid epidemic.

Earlier in the week, Johnson & Johnson was ordered to pay $572 million to Oklahoma while Purdue Pharmaceuticals was considering a blanket $12 billion to settle all suits against it.

“There aren’t many names that can avoid this,” a trader said. “Most, if not all, will have to pay.”

Petach Tikva, Israel-based generics producer Teva’s issues diverged.

The 2.8% senior notes due 2023, while dipping below 84 bid during the day, ended level at 84½ bid. The 3.15% senior notes due 2026 rose 1¼ points to close at 74¾ bid.

J.C. Penney gains

Meanwhile, in retail, J.C. Penney’s paper was seen gaining, market sources said.

The 5.65% senior paper due 2020 picked up ½ point to close at 94½ bid. The 5 7/8% senior secured paper due 2023 improved by 1 point to close at 84 bid.

On Thursday, news broke that several of the Plano, Tex.-based department store chain’s executives had made large purchases of its common stock.

Earlier this week, chief executive officer Jill Soltau purchased 500,000 shares at 56 cents a share.

The company’s chief merchant, chief customer officer and a board member also made recent purchases.

The company’s most recent earnings report showed disappointing earnings and a new partnership with a secondhand clothing company.

Bed Bath edges lower

Elsewhere in the space, Bed Bath’s long-term notes gave back some of Thursday’s gains, traders said.

The 5.165% senior notes due 2044 fell ½ point to close at 69½ bid. The 4.915% senior notes due 2034 shaved off ¼ point to close at 75¾ bid.

The Union, N.J.-based retailer’s notes popped on Thursday after rumors swirled that the company had hired an adviser to help set up potential mergers.

While the rumors remain unconfirmed, the market sent the notes higher.

Oil names mixed

As oil futures fell, distressed energy securities traded in varied directions, market sources said.

London-based contract driller Valaris’ issues ended higher.

The 5.2% senior notes due 2025 added 1 point to close at 59½ bid. The 7¾% senior notes due 2026 shot up 1¾ points to close at 65¾ bid.

Los Angeles-based independent oil and gas producer California Resources’ paper was mixed.

The 6% senior notes due 2024 jumped 6 points to close at 53 bid. The 8% paper due 2022 shed ¾ point to close at 56¾ bid.

Denver-based oil and gas producer Whiting Petroleum’s notes also saw mixed movements.

The 6¼% senior notes due 2023 tacked on 1 point to close at 79½ bid. The 6 5/8% senior notes due 2026 dipped 1¼ points to close at 74¼ bid.

West Texas Intermediate crude oil futures for October delivery ended the week down $1.61, closing at $55.10 per barrel.

North Sea Brent crude oil futures for October delivery finished at $60.43 after a 65 cent drop.

CBL improves

CBL’s notes improved at the end of the week, traders said.

The 5¼% senior notes due 2023 rose 1¼ points to close at 64¼ bid. The 4.6% senior notes due 2024 also gained 1¼ points to finish at 63¼ bid.

On Thursday, Fitch Ratings issued a downgrade for the Chattanooga, Tenn.-based real estate investment trust.

The agency lowered the company’s issuer default rating, citing the deterioration of its contingent liquidity.

PG&E up

In utilities, PG&E’s paper shifted higher, market sources said.

The 6.05% senior notes due 2034 added ¼ point to close at 109¾ bid.

On Friday, the San Francisco-based bankrupt electric utility reported $122 million of operating income for July on $1,498,000,000 of operating revenue, Prospect News reported.

The company is on the cusp of filing a restructuring plan in bankruptcy court next month after having won the sole right to do so.

© 2015 Prospect News.
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