Valeant bonds plummet on technical default warning
By Robert Smith
LONDON, March 15 (IFR) - Valeant Pharmaceuticals International's bond prices fell sharply on Tuesday, after the company disclosed that its delayed annual report could trigger a technical default.
The Canadian pharma company said in a regulatory filing that it will breach the reporting covenant on its bonds if it does not file its annual report by Tuesday. This allows holders of at least 25% of any series of notes to deliver a notice of default.
Valeant then has 60 days to file the annual report and cure the default.
The company's 1.5bn 4.5% 2023 note tumbled on the news, from a cash price bid of 83.25 to 76.60, according to Tradeweb. An investor said he saw bids in the low to mid 70s.
This means the bonds are back at the all time lows hit in October, as the furore around practices in its specialty pharmacies grew. The euro 2023 note hit a 76.60 cash price on October 22, according to Tradeweb.
"Most people will probably see this as a buying opportunity, as they're not going to allow this to trip a default," said a second investor.
But others adopted a more cautious approach.
"I have to see what comes out on the call first - there's so much noise on this," said a third investor.
Valeant began a conference call at 12pm London time. (Reporting by Robert Smith)
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