Morning Commentary: Mallinckrodt bonds bounce off lows; ContourGlobal, Teekay notes on deck

By Paul A. Harris

Portland, Ore., Nov. 10 – High-yield ETFs saw sizable outflows of $359 million on Monday, according to a trader.

ETFs were lower in Tuesday trading.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was off 29 cents at $83.90 per share heading into the New York mid-morning.

SPDR Barclays High Yield Bond ETF (JNK), at $35.82 per share, was 14 cents lower.

Although the ETFs saw outflows on Monday, asset managers took in cash, seeing $65 million of inflows on the day, the trader said.

Mallinckrodt bounces

The bonds of Mallinckrodt plc saw a bounce on Tuesday morning subsequent to falling 8 to 11 points on Monday after short seller Citron Research contended that the company would face headwinds in getting payers to pony up for a high-priced specialty drug, revenue the company requires to address a big acquisition-related load of debt, Citron said.

The Mallinckrodt International Finance SA/Mallinckrodt CB LLC 5 5/8% senior notes due Oct. 15, 2023 were 86¼ bid heading into the Tuesday mid-morning, a New York-based trader said.

Those bonds, which were trading at 93 bid, 94 offered before the Citron report, got as low as 84½ bid, 85 offered when the report hit the tape, the trader added.

Meanwhile the bonds of Valeant Pharmaceuticals International Inc. – another pharmaceutical name recently in the crosshairs of Citron Research, which put out a report drawing a comparison between Valeant and Enron – appear to have settled in lately, the trader said.

The Valeant 6 1/8% notes due 2025, which trade a lot, were 84½ bid, 85 offered on Tuesday, off lows of 82 bid, 83 offered last week, the trader said.

Teekay, ContourGlobal on deck

The primary market generated a modicum of news on Tuesday morning, a pre-holiday session in the United States where Veterans Day will be celebrated on Wednesday and the bond market will be closed.

Teekay Corp. talked a $200 million add-on to its 8½% senior bullet notes due Jan. 15, 2020 (B2) at 99.01.

Books close at 2 p.m. ET on Tuesday, and the deal is expected to price thereafter.

Talk comes in line with initial price guidance in the low 99 area.

ContourGlobal Power Holdings SA talked a $100 million add-on to its 7 1/8% senior secured notes due June 1, 2019 (B3/BB-/BB-) at 99.25 to 99.5.

Books close at 11 a.m. ET, and the deal is set to price thereafter.

Meanwhile Rackspace Hosting, Inc. plans to start a roadshow on Thursday for a $350 million offering of senior notes due January 2024 (Ba1/BB+).

Morgan Stanley, Goldman Sachs and JPMorgan are the joint bookrunners (see related stories in this issue).

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