Resolute deal on, then off; Valeant shops add-on; Rite Aid firms; market weakens

By Paul Deckelman and Paul A. Harris

New York, Nov. 13 – With the high-yield market continuing to weaken – as illustrated by the growing net outflows traders have seen on a daily basis from junk-rated mutual funds and exchange-traded funds, seen as a proxy for overall market liquidity trends – some issuers are starting to re-think their plans to access the junk market for funds at this time.

Market participants got another indication of this on Monday, as oil and natural gas company Resolute Energy Corp. first announced plans for a $550 million offering of new eight-year notes – but then mere hours later did an abrupt about-face, pulling the deal due to unattractive market conditions.

Prior to that withdrawal, Resolute’s existing notes – due to be taken out with the new-deal proceeds – had firmed solidly in busy trading.

But syndicate sources said that other prospective deals were still on, including drugmaker Valeant Pharmaceuticals International Inc.’s planned $750 million tap of its existing 2025 secured notes, a deal expected to price on Tuesday.

Away from the new deals, traders said that California Resources Corp.’s recently strong benchmark bonds slipped notably on market-leading volume.

Drugstore chain Rite Aid Corp.’s notes improved in brisk trading.

But struggling telecom operator Frontier Communications Corp. remained under pressure.

Statistical market performance measures were down for a fifth consecutive session on Monday.

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