Teva active as settlement reportedly nears; Gulfport Energy rises on production news

By James McCandless

San Antonio, Oct. 17 – The distressed debt space on Thursday continued to focus on pharmaceutical names.

Teva Pharmaceutical Industries Ltd.’s notes were active but varied in trading direction on news that the company is inching closer to a settlement over all opioid-related claims against it.

Sector peers Mallinckrodt plc’s and Endo International plc’s issues saw gains.

In oil and gas, Gulfport Energy Corp.’s paper spiked after the company reported higher production numbers for the third quarter.

As futures rose again, McDermott International, Inc.’s notes followed while Chesapeake Energy Corp.’s and Whiting Petroleum Corp.’s issues saw diverging movements.

Meanwhile, Ferrellgas Partners LP’s paper continued to slide in the wake of negative fourth-quarter earnings.

Retailer Rite Aid Corp.’s notes were spotted moving upward.

Teva in focus

Teva’s notes varied in direction on Thursday, traders said.

The 6¾% senior notes due 2028 lost 1 point to close at 87 bid. The 3.15% senior notes due 2026 added 1 point to close at 73½ bid.

Both tranches combined to see about $76 million on the tape by the close.

On Thursday, reports indicated that the Petach Tikva, Israel-based generic drug producer is inching closer to a settlement on all legal claims against it related to the opioid epidemic.

The company is offering to give away $15 billion in medication to the entities that have pursued legal action against it, along with a 10-year distribution deal that it values at $28 billion.

The news comes on the heels of a federal trial that Teva is a defendant in that is set to begin on Monday.

Despite the wide reporting, attorneys representing the accusers have denied that a deal is close to being reached.

“I would be surprised to see this end without them handing over a large amount of money,” a trader said. “I don’t know why they’re not just doing that. It would make the process go quicker.”

Pharma names gain

Other pharma names gained in the backdrop of shifts in the industry in recent days, market sources said.

Along with news of Teva’s potential settlement, Johnson & Johnson said on Wednesday that it is prepared to come to a $4 billion settlement to end the claims against it.

Three of the industry’s largest distributors are proposing a $50 billion settlement over similar charges.

Staines-upon-Thames, England-based drug maker Mallinckrodt’s issues were gaining.

The 5¾% senior notes due 2022 rose 1 point to close at 39 bid. The 4 7/8% senior notes due 2020 jumped up 2¼ points to close at 60 bid.

Dublin-based peer Endo’s paper also improved.

The 5 7/8% notes due 2024 shot up 2¼ points to close at 92 bid. The 6% senior notes due 2025 jumped 4¼ points to close at 65 bid.

Gulfport better

In oil and gas, Gulfport’s notes spiked in Thursday activity, traders said.

The 6 5/8% senior notes due 2023 gained 6½ points to close at 77½ bid.

After the close on Wednesday, the Oklahoma City-based independent oil and gas producer released a third-quarter production update.

The company said that its total oil and gas production saw an increase to 1,527 million cubic feet equivalent per day, better than that 1,427 million figure from the same period last year.

At the same time, the company also reported that the average price for natural gas shrank from last year’s $2.32 to $1.64 per thousand cubic feet.

Futures rise

Another day of rising oil futures was not met with uniform positivity from distressed oil tranches, market sources said.

West Texas Intermediate crude oil futures for November delivery added 57 cents to finish at $53.93 per barrel.

North Sea Brent crude oil futures for December delivery settled at $59.91 after a 49 cent lift.

Houston-based oil and gas engineering company McDermott’s issues stuck to a positive trend.

The 10 5/8% senior notes due 2024 garnered 2 points to close at 28¾ bid.

Oklahoma City-based producer Chesapeake Energy’s paper diverged.

The 8% senior paper due 2025 shaved off ½ point to close at 67¾ bid. The 8% senior paper due 2027 rose ¼ point to close at 64¾ bid.

Denver-based peer Whiting Petroleum’s notes were also mixed.

The 6¼% senior notes due 2023 fell ¾ point to close at 75¾ bid. The 6 5/8% senior notes due 2026 picked up 2 points to close at 68¼ bid.

Ferrellgas slides

Meanwhile, Ferrellgas’ issues continued to slide lower, traders said.

The 6¾% senior notes due 2022 dropped 1½ points to close at 81¾ bid.

On Wednesday, the notes shed ½ point.

The losses for the Overland Park, Kan.-based propane name’s structure came after it reported fourth-quarter earnings, where a loss of 72 cents per share and revenues of $279.1 million underwhelmed expectations.

It also became involved in a dispute with large creditor TPG Specialty Lending, which claims that the company is in default.

“They will probably be pushed into a restructuring plan,” a trader said.

Rite Aid up

Retailer Rite Aid’s paper was moving upward through the day, market sources said.

The 6 1/8% senior notes due 2023 picked up 1 point to close at 84½ bid.

The Camp Hill, Pa.-based drug store chain’s structure saw a positive day in the aftermath of a Wednesday ratings downgrade from S&P Global Ratings.

The agency lowered the ratings on its 2027 and 2028 unsecured notes, calling a recent cash tender offer a distressed exchange and likening it to a default.

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