Debt holders are placing all-or-nothing bets on junk bonds from drug makers embroiled in lawsuits over the opioid epidemic and price-fixing, Bloomberg News reported. The investors are taking advantage of sliding prices for notes issued by companies such as Endo International Plc, Mallinckrodt Plc and Teva Pharmaceutical Industries Ltd., which face allegations that they’ve fueled the opioid epidemic, and that they’ve engaged in price-fixing of generic drugs. Mallinckrodt is also in a legal battle with the U.S. over a plan to slash reimbursements on Acthar, the company’s star drug. Some junior bonds are trading deep in junk territory, with credit raters warning that some Teva holders could get back only half of face value if there’s a default — or maybe nothing in Endo’s case. Notes of both companies slid in response to an expanded price-fixing lawsuit, with some trading at less than 80 and 70 cents on the dollar respectively, and Mallinckrodt’s 2023 notes slid to record intraday lows just above 60.
