U.S. Steel down on tariff news; Teva mixed after negative week

By James McCandless

San Antonio, May 31 – At the end of a short week, the distressed debt market was pushed lower on new trade climate worries.

United States Steel Corp.’s notes declined on news that the Trump administration would impose tariffs on all products coming from Mexico.

Sector peer AK Steel Holding Corp.’s issues finished mixed.

Elsewhere, in the pharma space, Teva Pharmaceutical Industries Ltd.’s paper also closed the day mixed after a week of negative headlines.

Mallinckrodt plc, another drugmaker, saw its notes also lose during the session.

In retail, J.C. Penney Co., Inc.’s issues gained before receiving a ratings downgrade.

PetSmart, Inc.’s paper continued to improve.

Oil futures continued to drag, taking with it Ensco Rowan plc’s and Alta Mesa Resources, Inc.’s notes while California Resources Corp.’s issues were mixed.

U.S. Steel declines

U.S. Steel’s notes declined through the Friday session, traders said.

The 6 7/8% notes due 2025 fell 1¼ points to close at 86½ bid. The 6¼% notes due 2026 dropped 5½ points to close at 84 bid.

The Pittsburgh-based steel manufacturer’s structure was pushed lower on Friday after the Trump administration announced Thursday evening that it would impose tariffs on all goods coming out of Mexico for the foreseeable future.

“Here we were thinking that we got past all of this,” a trader said. “But I guess you can’t predict much these days, which doesn’t bode well for markets.”

Earlier this month, the company felt similar pressure after the administration announced that it had agreed to lift tariffs on metals from Canada and Mexico.

West Chester, Ohio-based sector peer AK Steel’s issues finished mixed.

The 7% notes due 2027 declined 3½ points to close at 78 bid. The 6 3/8% notes due 2025 gained ¾ point to close at 77½ bid.

Teva mixed, Mallinckrodt loses

Elsewhere, drug name Teva’s paper yielded mixed results at the end of the day, market sources said.

The 3.15% paper due 2026, while swinging between 75 bid and 79 bid during the day, ended level at 76½ bid. The 4.1% paper due 2046 shed ½ point to close at 65 bid.

After a week of negative headlines, the Petach Tikva, Israel-based generic drugmaker’s tranches have closed the week further into distressed territory.

The company announced this week that it had settled a lawsuit over the opioid crisis with Oklahoma for $85 million, higher than observers had anticipated.

Following the settlement, two analysts said that the company would either have to win any upcoming litigation or face the possibility of paying out billions in settlements.

Staines-upon-Thames, England-based sector peer Mallinckrodt’s notes were losing Friday.

The 5½% notes due 2025 trailed ½ point to close at 64 bid. The 5¾% notes due 2022 lost ½ point to close at 81½ bid.

J.C. Penney, PetSmart gain

Meanwhile, retailer J.C. Penney’s issues moved higher, traders said.

The 5 7/8% notes due 2023 edged up ¼ point to close at 80 bid. The 8 5/8% notes due 2025 tacked on 1½ points to close at 50 bid.

On Friday afternoon, Moody’s Investors Service issued a ratings downgrade for the Plano, Texas-based department store chain.

The agency lowered its corporate family rating, probability of default rating and issue-level ratings.

Moody’s cited pressure on the company to increase sales performance in an increasingly competitive retail space that would keep it highly leveraged.

Phoenix-based pet supplies retailer PetSmart’s paper was similarly better.

The 8 7/8% paper due 2025 added ¾ point to close at 92 bid. The 5 7/8% paper due 2025 also rose ¾ point to close at 94 bid.

The company saw positive attention on Thursday after a Bloomberg analyst said that its e-commerce segment Chewy.com, soon to have its initial public offering, could be valued at $10 to $16 billion.

Oil space negative

Oil futures fell again with distressed energy tranches following along, market sources said.

London-based contract driller Ensco Rowan’s notes dragged.

The 5.2% notes due 2025 lost 1¾ points to close at 69¼ bid. The 7¾% notes due 2026 dropped 1½ points to close at 74½ bid.

Houston-based independent oil and gas producer Alta Mesa’s issues were also negative.

The 7 7/8% notes due 2024 shed 1½ points to close at 36 bid.

Los Angeles-based producer California Resources’ paper trended lower but ended mixed.

The 6% notes due 2024 held level at 64 bid. The 8% notes due 2022 fell 3 points to close at 70½ bid.

West Texas Intermediate crude oil futures for July delivery moved $3.09 lower to end the session at $53.50 per barrel.

North Sea Brent crude oil futures for July delivery finished Friday at $64.49 per barrel after a $2.38 loss.

© 2015 Prospect News.
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