Bonds and shares of Valeant Pharmaceuticals plunged just after the lunch hour this afternoon on reports that House Democrats are seeking a subpoena to force the drugmaker to unseal information related to price increases earlier this year on two heart disease drugs. The 6.125% notes due 2025, for one, dropped to 91.75/92.75, from 97.75/98.75 earlier in the session, 99/100 going out last week, and 103/104 prior to the September market slump, according to sources.
Recent block trades were reported at 92.5, and the 5.875% notes due 2023 followed a similar tack, with trades reported as low as 91.25, trade data show. Morning prints in the latter were at 99, versus par on Friday and a 103 context several weeks ago, the data show.
Members of the House Oversight and Government Reform Committee asked their chairman to subpoena Valeant heart-disease-drug documents and invited the company's CEO to testify at hearings on drug-price increases next week, according Bloomberg News, a Barron's blog, and a variety of follow-up news outlets, citing emailed statements.
Shares of the Canada-based company, which trade on the NYSE under the symbol VRX, dropped almost 17% after the reports, to $167.93 per. Shares had been hovering around the unchanged market up to the news, which hit the wires around 12:45 p.m. EDT, after falling roughly 18% over the past two weeks.
The company’s loans were also lower following the news amid the soft market conditions. All four tranches of institutional loans – the TLC due 2019 (L+300, 0.75% LIBOR floor), the TLD due 2019 (L+275, 0.75% floor), the TLE due 2020 (L+300, 0.75% floor), and the TLF due 2022 (L+325, 0.75% floor) were recently marked at 98.5/99, all off roughly a point from the market open, according to sources. As of June 30, there was over $8.5 billion outstanding under the four institutional tranches, according to SEC filings.
Valeant Pharmaceuticals, which is based in Laval, Canada, makes a broad range of pharmaceutical products. Corporate issuer ratings are BB-/Ba3, with stable and positive outlooks, respectively, while the senior notes are rated B/B1. – Matt Fuller/Kerry Kantin
Check out www.highyieldbond.com for free news and analysis on the junk bond market.