Valeant debt gets boost from guidance hike, drive to delever

Valeant Pharmaceuticals’ broad stack of unsecured debt was among the most active in high-yield trading Tuesday, climbing alongside the company’s term loans after the debt-laden drug maker raised its 2017 EBITDA guidance on its quarterly earnings rollout, which underscored plans to meaningfully reduce its debt load.

Valeant saw its largest gains on the shorter-end of its cap structure, with its 6.375% notes due 2020 jumping two points, to 91.625, and among the most active in early trading, according to MarketAxess. The issuer’s 5.875% notes due 2023 ticked up three-quarters of a point, to 78.75, while the 6.125% notes due 2025 rose 0.875 points, to 76.875, with both changing hands at a steady clip.

Valeant was also the best European performer today, with its 4.5% notes due 2023 up 2.5 points, at 74, versus lows of 69.25 in mid-April.

On the loan front, Valeant’s F-3 tranche B term loan due April 2022 was quoted at 101.375/101.625 today, up about three-eighths of a point from the last session, sources said.

The moves follow Tuesday’s announcement that Valeant is hiking its 2017 adjusted EBITDA guidance by roughly $50 million, to $3.6–3.75 billion, from a previous guidance of $3.55–3.7 billion.

Creditors could also take relief in a stronger liquidity profile, with Valeant unveiling balance-sheet cash of $1.21 billion as of March 31, versus $542 million year over year.

Meanwhile sales and adjusted EBITDA for the first quarter of were $2.1 billion and $861 million, respectively, both falling shy of analyst forecasts by about 3%, according to consensus data provided by S&P Global Intelligence.

The B/B3 issuer pared its substantial debt load by $1.3 billion in the first quarter, with $28.54 billion outstanding as of March 31, or down about 5.5% year over year.

Most recently, Valeant announced last week it has managed to pay down its term loan debt by roughly $220 million following the earlier-than-expected close of the sale of three skincare brands to L’Oreal as well as its divestiture of a manufacturing facility in Brazil.

“We believe strongly that we have clear pathways to get our capital structure in order by one, reducing our leverage throughout the sales; two, through cash generation; and three, the best way, through growth our operating earnings,” Valeant CEO Paul Herendeen said on a Tuesday earnings call with analysts.

Valeant Pharmaceuticals (NYSE: VRX) is a Laval, Quebec–based specialty pharmaceutical company. — James Passeri/Kelsey Butler

Leave a Reply

Comments are moderated and will not appear until the admin has approved them.