Frontier Communications notes gain on asset sale reports; FirstEnergy Solutions issues continue losses

By James McCandless

San Antonio, April 4 – The distressed debt market continued to see low levels of activity on Wednesday, as traders reported most of the volume remained in news-driven names.

Frontier Communications Corp. notes saw gains as reports surfaced that it is exploring asset sales.

FirstEnergy Solutions Corp. issues continued falling in high volume as it enters the bankruptcy process.

Community Health Systems, Inc. paper extended its downturn as the company makes progress on its divestiture plan.

Intelsat SA notes saw more gains as it contributed to the volume of the distressed telecom sector. Mallinckrodt plc saw a down day as it contributed volume in the healthcare space. A slight uptick in oil futures spurred a down day for Ensco plc.

Frontier may shop assets

Norwalk, Conn.-based wireline telecom name Frontier Communications notes traded higher, according to a market source, after reports confirmed that the company has hired financial advisory firm Evercore to help find buyers for some assets. Particularly, the company is hoping to sell its FiOS networks in Florida, Texas, Connecticut and California.

The company recently received positive marks for its decision to put a stop to its quarterly dividend to focus on debt repayment.

“There’s some question as to if they can get the price they want for these assets,” a trader said. “And most of them have only been on their books for a few years.”

The 7 5/8% notes due 2024 gained about ½ point to close at 62¾ bid. The 10½% notes due 2022 rose about 2½ points to close at 86 bid. The 11% notes due 2025 jumped up about ¾ point to close at 75½ bid.

FirstEnergy slides again

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw notes trade down again, traders confirmed. Over the weekend, it and FirstEnergy Nuclear filed for bankruptcy. Despite this, the company confirmed that it would continue to appeal the Department of Energy for federal intervention against the closure of certain coal and nuclear-powered plants.

The 6.05% issues due 2021 lost about ¼ point to close just below 29 bid. The 6.8% bonds due 2039 rose ½ point to close at about 28¼ bid.

Community Health paper falls

Franklin, Tenn.-based hospital operator Community Health Systems saw another downturn, market sources confirmed. In recent weeks, the company has made several maneuvers to resolve its debt issues, including the sale of four hospitals that it warned shareholders would be making several divestitures over the coming year.

The 7 1/8% paper due 2020 shaved off about ¼ point to close at just under 81½ bid. The 6 7/8% due 2022 lost about ½ point to close at 57 bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat continued to be another active name in distressed telecom.

The Intelsat Jackson SA 5½% notes due 2023 rose ½ point to close at 81½ bid. The 7¼% notes due 2020 gained about 1 point to close at 94½ bid.

Britain-based drugmaker Mallinckrodt entered another day of high volume in the distressed healthcare space.

The 4¾% issues due 2023 lost about ¼ point to close at 76½ bid.

Oil futures started to climb back up, while Britain-based oil driller Ensco saw its 5¾% bonds due 2044 lose ½ point to close at 67½ bid.

“We’re still seeing a lot of volatility in equity markets, which spooks people from distressed,” a trader said.

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