Distressed investors ‘love to hate’ Frontier; California Resources softens; TXU faces more battles

By Stephanie N. Rotondo

Seattle, Aug. 17 – Distressed bonds investors continued to focus on Frontier Communications Corp., a name “people love to hate,” a trader said.

The trader also said the company’s debt “continues to dip,” seeing the benchmark 11% notes due 2025 ending with an 84 handle.

A second trader said there were “lots of trades” in the 11% notes, which he called down over 2 points at 84¼.

The trader also saw the 10½% notes due 2022 dropping a point to 88.

Yet another source deemed the 7 5/8% notes due 2024 off a point at 77½ bid.

While there was no fresh news out on the Norwalk, Conn.-based telecommunications company, a trader remarked that the “company is under a lot of pressure.”

“Their numbers have been weak, and I think people are preemptively trying to get out,” he said.

He added that bonds experienced a “relief rally” on the back of the company’s latest results, which “weren’t awful.”

“But then all the shorts got cleaned up and it got ugly,” he said.

Elsewhere in DistressedLand, California Resources Corp.’s 8% second-lien notes due 2022 were called “a little bit lower,” trading in a 54 to 54½ context.

Another trader pegged the paper at 54½, down half a point.

Another source saw the issue declining 1¾ points to 55 bid.

There was no fresh news out on the Los Angeles-based MLP. Furthermore, domestic crude oil prices managed to end a touch higher on the day.

The gains in the commodity were attributed to the latest report from the U.S. Energy Information Administration on Wednesday, which showed a larger-than-expected drawdown of inventories.

TXU troubles

A trader said Energy Future Holdings Corp.’s 11¾% notes due 2022 experienced “a little bit more activity” on Thursday amid reports that Elliott Management is attempting to block Berkshire Hathaway’s bid for Oncor Electric Delivery, a subsidiary.

However, the trader said the news “didn’t really move the needle much,” calling the paper “maybe marginally lower.”

Last month, Berkshire offered to pay $9 billion for Oncor Electric, a unit of the bankrupt company formerly known as TXU. Including the assumption of debt, the deal is valued at $18.2 billion.

But Elliott has reportedly amassed holdings of $60 million of the unit’s leveraged buyout notes in an effort to block the Berkshire bid.

Elliott has said that it doesn’t believe Berkshire’s offer values the company high enough.

Berkshire has meantime indicated that it will not change its bid.

Still, the Oncor sale is a key point in TSU’s ultimate plan to exit from bankruptcy, which is where it has been since 2014.

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