California Resources lower amid oil rise; Valeant unchanged with asset sale speculation; Walter higher

By Colin Hanner

Chicago, June 6 – Activity was less news-driven on Tuesday in the distressed debt arena than it was Monday, with activity dropping off for several issues that had previously catapulted to the top of the most-active list.

Tenet Healthcare Corp. was capturing the bulk of the attention in the broader high-yield market following the pricing of more than $5 billion in new issues from the hospital group on Monday, a market source said.

Breaking from a recent trend, crude oil was lifted on the day ahead of a weekly Energy Information Agency report that is suggested to show another week of lower U.S. crude stockpiles. Movement was mixed as a result, with California Resources Corp. breaking from the trend of following the price fluctuation of the broader market.

A media report said that Valeant Pharmaceuticals International Inc. was in talks to sell off several billion dollars of its assets, though bonds were nearly unchanged on the day.

A report by Citron Research was short-lived for Mallinckrodt Pharmaceuticals, which saw virtually no trading in an issue that came under fire yesterday after the research firm claimed the company was price-gouging one of its drugs. Another issue traded down marginally.

Mortgage servicing company Walter Investment Management Corp. was again higher on Tuesday following a decision to hire a financial debt restructuring adviser to support its debt restructuring initiatives.

And Intelsat SA was lower across several issues, though volume trended lower on the session.

Oil trends higher, E&P lower

Crude oil did an about-face on Tuesday, with West Texas Intermediate crude tacking on more than 1% to finish above $48 a barrel.

California Resources Corp.’s 8% notes due 2022 were down “a smidge” from Monday’s lows, though finished the session higher than how they started on Tuesday, a market source said.

The notes finished down 5/8 point to 72, the source said, while another market source quoted the notes at a 72 bid, 72¾ offer.

Plano, Texas-based Denbury Resources Corp.’s 6 3/8% notes due 2021 were down 2¾ points to 74½, a market source said, with the steep downfall attributable to the company’s corporate presentation on Tuesday.

The company said it expects 2017 full-year production to be “relatively flat,” with the anticipation of “slight production growth” for 2018.

Valeant active with no moves

On Tuesday, a media report suggested that Valeant is negotiating with Germany-based Carl Zeiss Meditec to sell off its eye-surgical products business, an asset that previously had a $2 billion price tag.

Similar rumors surfaced in November when Allergan and TPG were rumored to be on the offering end of a possible transaction.

Valeant’s 6 1/8% notes due 2021 were “pretty active,” a market source said, though traded around the same levels as yesterday in the low-80s.

Mallinckrodt calms

A day following a Citron Research report that outlined a case of Mallinckrodt price-gouging a particular drug, Mallinckrodt’s bonds were much quieter on the day.

Mallinckrodt’s 4¾% notes due 2023 saw virtually no trading on Tuesday, a market source said, and the 5½% notes due 2025 were down 5/8 point to 90.

Its stock was nearly untouched, down 5 cents, or 0.12%, to $40.03.

Walter continues gains

Following news that Tampa, Fla.-based residential mortgage servicing company Walter Investment would bring in a financial debt restructuring adviser, its 7 7/8% notes due 2021 had shot up several points in the past two sessions.

On Tuesday, they were up 1½ points to 63.

Volume low, but Intelsat pares

A trader said that although Intelsat Luxembourg Holdings SA’s 8 1/8% notes due 2023 did not see quite as much volume as Monday, they were lower nonetheless.

The notes were down ½ point to 51.

Intelsat Jackson Holdings SA’s 7¼% notes due 2020 were down ¼ point to 93 on more than $4 million exchanging hands.

Similarly-held 7½% notes due 2021 were down 3/8 point to 91.

Distressed roundup

Bristow Group Inc., a helicopter transport service that mostly serves the offshore energy drilling industry, was up markedly in its 6¼% notes due 2022, which gained 5 points to finish at 66¾, a market source said.

Car rental company Hertz Corp.’s 5½% notes due 2024 were down 2½ points to 77¼.

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