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Valeant Pharma High Yield Bonds, Shares Slip After Report of Subpoena Re Price Increase

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

Follow Matthew on Twitter @mfuller2009 for leveraged debt deal-flow, fund-flow, trading news, and more.

Check out www.highyieldbond.com for free news and analysis on the junk bond market. 

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