Windstream mixed again on rating change, exchange; PHI down on new rating, negative outlook

By James McCandless

San Antonio, June 19 – The distressed debt market doubled down Tuesday on the same names that drove trading on Monday.

Windstream Holdings, Inc. notes were mixed again after a ratings downgrade. On Monday, the company announced exchange offers for multiple series of notes.

PHI, Inc. issues declined as Standard & Poor’s assigned a rating for its new privately placed $500 million senior secured note offering.

PetSmart, Inc. paper was mixed as the company and its creditors dispute a recent equity transfer in which the company moved 36.5% of its stake in a profitable e-commerce arm out of creditor’s reach.

Intelsat SA notes were mixed. Last week, the company announced a buyback for its 7¾% notes due 2021. Frontier Communications Corp. issues were mixed after a recent auction failed to produce a satisfactory bid for its Florida assets. Talen Energy Supply, LLC paper fell.

Windstream mixed

Little Rock, Ark.-based network communications solutions name Windstream’s notes were mixed for a second day, traders confirmed, after S&P lowered the company’s corporate credit rating, the rating of several notes and affirmed a negative outlook (see related story elsewhere in this issue).

On Monday, the company announced an offering of new second-lien notes in exchange for multiple series of its existing senior notes. The exchanges are being carried out by the company’s subsidiaries Windstream Services, LLC and Windstream Finance Corp.

The 7¾% notes due 2021 lost about 2¼ points to close at around 81¼ bid. The 7¾% notes due 2020 gained about ¼ point to close at 92 bid.

On Monday, the 7¾% notes due 2021 rose about 2 points and the 7¾% notes due 2020 were level.

PHI issues lose

Lafayette, La.-based offshore energy transportation name PHI’s issues declined, market sources confirmed, after S&P assigned its B issue-level rating to its new privately placed $500 million senior secured note offering (see related story elsewhere in this issue).

Last Friday, the company announced of a cash tender offer to purchase any and all of its $500 million in outstanding 5¼% senior notes due 2019. The offer expires on July 17.

The company plans to purchase the notes using the net proceeds from the new $500 million offering.

The 5¼% notes due 2019 fell about 3½ points to close at around 95 bid.

On Monday, the 5¼% notes were level.

PetSmart mixed

Phoenix-based pet supplies retailer PetSmart paper was mixed. The company is working to quell creditor concerns after it shifted 36.5% of its stake in e-commerce segment Chewy.com away from public reach to private hands. Creditor groups have begun hiring advisors to explore all options to protect its remaining collateral, including a potential restructuring deal and reversing the transfer.

“I would be surprised if PetSmart changed what they’ve already done with respect to Chewy,” a trader said. “Realistically, bondholders are just looking to protect what is left.”

The 5 7/8% paper due 2025 was level at 75½ bid. The 8 7/8% paper due 2025 gained ¼ point to close at 62½ bid.

On Monday, the 5 7/8% paper lost about 1½ points and the 8 7/8% paper fell ½ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes were mixed. Last week, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 rose about 1¾ points to close at 92½ bid. The 8 7/8% notes due 2023 shaved off about 2 points to close at 77½ bid.

Norwalk, Conn.-based wireline name Frontier Communications issues were also mixed. The company’s recent auction for its Florida assets failed to produce a satisfactory bid.

The 7 5/8% notes due 2024 lost about 1 point to close at 72½ bid. The 10½% notes due 2022 declined about ¼ point to close at 92¾ bid. The 11% notes due 2025 rose about ½ point to close at around 84 bid.

Talen Energy Supply, a subsidiary of Allentown, Pa.-based independent power producer Talen Energy, saw paper fall. On Monday, Moody’s Investors Service lowered its corporate family rating, its probability of default rating and others.

The 6½% paper due 2025 shed about 3½ points to close at around 75¼ bid.

“Today was softer than yesterday,” a trader said. “If there are more developments on trade and tariffs this week, we’ll take our cues from the equity market’s reaction, which hasn’t been all that great so far.”

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