Mallinckrodt dips on negative attention; Halcon lower on restructuring chatter; U.S. Steel up

By James McCandless

San Antonio, July 22 – The distressed space trended lower during Monday with a focus on pharmaceutical names.

Mallinckrodt plc’s notes dipped amid negative headlines about its executives’ handling of opioid medications and the halting of its Acthar Gel clinical study.

Sector peer Teva Pharmaceutical Industries Ltd.’s issues were also lagging.

In energy, Halcon Resources Corp.’s paper was moving lower as the company inches closer to a bankruptcy filing.

Oil futures rose, though California Resources Corp., Ensco Rowan plc and Superior Energy Services, Inc. finished mixed.

In retail, J.C. Penney Co., Inc.’s issues improved in the wake of hiring restructuring advisers.

Bed Bath & Beyond Inc.’s paper was in decline.

Steel name United States Steel Corp.’s notes trended higher.

Mallinckrodt, Teva down

Mallinckrodt’s notes were seen dipping on Monday, traders said.

The 5 5/8% senior notes due 2023 lost 3¼ points to close at 63 bid. The 5¾% notes due 2022 shed 2¾ points to close at 74½ bid.

The Staines-Upon-Thames, England-based drug manufacturer’s structure was under pressure on Monday amid negative headlines.

On Friday, the market caught wind of a report in The Washington Post that revealed the supposed indifference to the opioid epidemic from company executives.

The emails were unsealed as part of one of the growing number of lawsuits against makers of opioid prescription drugs.

Also last week, the company announced that it was discontinuing a clinical study on whether Acthar Gel could be used to treat ALS.

“The pressure keeps ramping up on these pharmaceutical names,” a trader said.

Petah Tikva, Israel-based generic drug name Teva’s issues were also lagging in the day’s trading.

The 3.15% senior notes due 2026 dropped ¾ point to close at 73½ bid. The 4.1% notes due 2046 fell ¾ point to close at 63½ bid.

Halcon lower

In energy, Halcon Resources’ paper was moving lower, market sources said.

The 6¾% senior paper due 2025 shaved off ½ point to close at 23 bid.

The Houston-based independent oil and gas producer was under a microscope on Monday as chatter of a bankruptcy filing plagues the name.

“Trading on its stock was halted for a bit today, apparently,” a trader said. “I think the bonds [have] been teetering in the 20s for a while and they’ll probably file soon.”

The company’s paper has been steadily declining as it reports steadily increasing earnings losses.

In the last earnings report in May, the company reported a loss of $2.12 per share.

Oil names mixed

Oil futures spent the session gaining, though top distressed energy tranches saw mixed results, traders said.

Los Angeles-based producer California Resources’ notes were mixed.

The 6% senior notes due 2024 lopped off 3 points to close at 63 bid. The 8% notes due 2022 added ¼ point to close at 69 bid.

London-based contract driller Ensco Rowan’s issues were similarly mixed.

The 5.2% senior notes due 2025 jumped up 4¾ points to close at 72¼ bid. The 7¾% notes due 2026 lost ¼ point to close at 73 bid.

Houston-based oilfield services provider Superior Energy Services’ paper varied in direction.

The 7 1/8% senior paper due 2021 declined by ½ point to close at 62½ bid. The 7¾% paper due 2024 rose ½ point to close at 54½ bid.

As tensions with Iran flared over the weekend, West Texas Intermediate crude oil futures for August delivery reacted with a 59 cent rise to end the session at $56.22 per barrel.

North Sea Brent crude oil futures for September delivery finished the day at $63.26 per barrel after a 79 cent gain.

J.C. Penney up, Bed Bath loses

In the retail space, J.C. Penney’s notes saw an improvement, market sources said.

The 7.4% senior debentures due 2037 tacked on 1 point to close at 22¼ bid.

Last week, news broke that the Plano, Texas-based department store chain has hired restructuring advisors to help handle its $4 billion debt load.

The company, along with many traditional retailers in the sector, is struggling to adapt to a retail climate where e-commerce names are increasingly taking market share.

Union, N.J.-based sector peer Bed Bath & Beyond’s issues declined.

The 5.165% senior notes due 2044 slipped ½ point to close at 66½ bid. The 4.915% notes due 2034 dropped ½ point to close at 73¼ bid.

U.S. Steel higher

Elsewhere, U.S. Steel’s paper was trending higher, traders said.

The 6¼% senior paper due 2026 garnered ¼ point to close at 90½ bid.

On Friday, the Pittsburgh-based steel manufacturer announced that it would lay off 2,500 people from its factory in Slovakia.

The factory employs 12,000 workers.

The company’s structure has been pushed into distressed territory recently as the global trade climate remains uncertain and other countries’ steel becomes more competitive in price.

© 2015 Prospect News.
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