Ocwen Financial down big after Consumer Financial lawsuit comes forward; Petsmart down; pharma mixed

By Colin Hanner

Chicago, April 20 – Activity in the distressed debt market was business as usual on Thursday, traders said, although the sharp downturn of a high-yield company dove it into distressed territory.

Atlanta-based residential and commercial mortgage provider Ocwen Financial Corp. was down at least 20 points during intraday trading, traders said, on the back of the Consumer Financial Protection Bureau suing the company for engaging in “significant and systemic misconduct at nearly every stage of the mortgage servicing process,” according to a Reuters report.

“Everything else is lowlight after that highlight,” a trader said of the other movers of the day.

Elsewhere, Petsmart, Inc. continued to leak following its acquisition of Chewy Inc. on Tuesday, a trader said.

Crude oil futures slowed its losses on Thursday, as did California Resources Corp.

Pharmaceuticals companies Valeant Pharmaceuticals International, Inc. and Concordia International Corp. were mixed following consistent losses on Tuesday and Wednesday.

iHeartCommunications, Inc. notes were down, and several idiosyncratic issues from Wednesday continued to trade into Thursday’s session.

Ocwen’s downfall

Ocwen Financial’s 8 3/8% notes due 2022 were down 18 points to 85 to finish the session, traders said, but had traded as low as 82 during intraday trading.

Its stock, meanwhile, was down $2.91, or 53.89%, to $2.49.

The Consumer Financial Protection Bureau cites inaccurate statements, payments and faulty management of its escrow accounts, Bloomberg reported. Since the recession, Ocwen’s business has increased eightfold.

Ocwen disputes the lawsuit.

Petsmart continues descent

Petsmart’s 7 1/8% notes due 2023 were down to a 92½ zip code on Thursday, following movement in 94- to 95-zip code on Wednesday and similar movement on Tuesday.

Not many details have been made public about the acquisition, though Record reported that Petsmart is acquiring Chewy Inc. for $3.35 billion.

In health care

After a slow downfall the past two sessions, pharmaceutical companies were mixed.

Valeant’s 6 1/8% notes due 2025 were up 1/8 point to 73 5/8, a trader said, while its 5 7/8% notes due 2023 were unchanged at 73¾.

Concordia’s 7% notes due 2023 were up ½ point to 16½.

And its 9½% notes due 2022 were down ½ point to 18¼.

In related-health care moves, Franklin, Tenn.-based hospital operator Community Health Corp.’s 6 7/8% notes due 2022 were down 5/8 point to 83 3/8.

In energy

Crude oil futures continued to fall on rising stockpile news from the Energy Information Agency on Wednesday, though not as drastically as a day prior. Nonetheless, distressed exploration and production companies fell with the commodity.

California Resources’ 8% notes due 2022 were down 1 to 76½ on “pretty heavy volume,” a trader said.

Plano, Texas-based Denbury Resources Inc.’s 6 3/8% notes due 2021 were down ½ point to 81.

On the other hand, Houston-based offshore drilling contractor Atwood Oceanics, Inc.’s 6½% notes due 2020 were up “almost 2 points” to 89 5/8, in tandem with its stock on the session.

In coal, St. Clairsville, Ohio-based Murray Energy Corp.’s 11¼% notes due 2021 were unchanged at 75½, but did see heavy volume, a trader said.

And power producer Talen Energy Corp.’s 6½% notes due 2025 were up ¼ point to 79¼.

iHeart falling

Traders noticed losses for the media and entertainment company on Thursday, especially the 14% notes due 2021, which were down 2½ points to 30¾.

And its 9% notes due 2021 were down 1¼ points to 76¾.

One-off wrap

Intelsat Jackson Holdings SA’s 5½% notes due 2023 were up 3/8 point to 84¾.

Walter Investment Management Corp.’s 7 7/8% notes 2021 were down 1 point to 60¾ after a 3-plus point gain on Wednesday.

Seeing just two trades, instrument retailer Guitar Center Inc.’s 9 5/8% notes due 2020 were up 5 points to 55¼.

Packaging provider PaperWorks Industries, Inc.’s 9½% notes due 2019 were down ¾ point to 75¾, completing a 1-point decrease across the past two sessions.

And tween retailer Claire’s Stores Inc.’s 9% notes due 2019 were up 1/8 point to 44.

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