Intelsat notes rise on unit’s role in government project; Mallinckrodt to repay debt

By James McCandless

San Antonio, April 16 – Traders reported a slow start to the week in the distressed debt market, with very few names making waves.

Intelsat SA’s notes traded higher as subsidiary Intelsat General was put on a team of companies to develop a satellite payload to aid in aircraft navigation for the Federal Aviation Administration.

Mallinckrodt plc’s bond issues fell as the company announced the $300 million repayment of unsecured, fixed-rate notes as part of a 2013 subsidiary spinoff.

Community Health Systems, Inc.’s paper was mixed. Last week, the company announced a round of layoffs as part of its efforts to rein in its debt.

Frontier Communications Corp.’s notes were mixed as the company continues to seek a buyer for certain assets. FirstEnergy Solutions Corp.’s issues were actively traded but ended level as aid for its at-risk plants remains in doubt. Nine West Holdings, Inc.’s paper traded up a week after its bankruptcy filing.

Intelsat gets task order

Luxembourg-based satellite communications company Intelsat saw notes trade up, traders confirmed, after announcing that the FAA had put subsidiary Intelsat General on a team of companies with a task order of developing and operating a satellite payload to aid aircraft navigation. The team will work with a focus on precision approaches to airports without dependence on ground-based infrastructure.

“The bonds may not be climbing at the same rate as the stock, but they’ve been popular,” a trader said.

The Intelsat Jackson SA 5½% notes due 2023 rose 1¼ points to close at 84½ bid. The 7¼% notes due 2020 jumped up about 2¼ points to close around 98 bid.

Mallinckrodt down

Britain-based drug maker Mallinckrodt’s debt issues slid again as the company announced a $300 million debt repayment of unsecured, fixed-rate notes maturing April 15, 2018 with cash on hand, according to a market source. The debt was issued as part of the 2013 spinoff of Mallinckrodt International Finance SA. In a release, the executive vice president and chief financial officer said that the move is part of the company’s focus on reducing debt.

Last week, the company’s issues dropped as a former employee filed a lawsuit against the company over allegedly continuing to raise the price of a drug without knowing the contents.

The 4¾% notes due 2023 lost about ¼ point to close at around 73 bid. On Friday, the notes lost about ¾ point.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems’ paper was mixed in trading, traders confirmed, after the company announced last Thursday that it had laid off at least 70 employees from its corporate headquarters throughout last week.

The move is part of a series of measures taken by the company to reduce its debt, most recently completing a set of asset sales.

The 7 1/8% paper due 2020 traded up about 1 point to close at around 84 bid. The 6 7/8% paper due 2022 shaved off ½ point to close at 57¾ bid.

The 7 1/8% paper and the 6 7/8% paper rose ¼ point on Friday.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications’ notes were mixed as the search for a buyer for certain assets continues.

The 7 5/8% notes due 2024 fell about ¼ point to close at around 64¼ bid. The 10½% notes due 2022 traded up slightly but remained level at 87¾ bid. The 11% notes due 2025 rose about ¾ point to close at 78¼ bid.

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw issues active in volume but ending level as more doubt is cast on the prospect of the government rendering aid for at-risk power plants.

The 6.05% notes due 2021 remained at 32 bid. The 6.8% bonds due 2039 remained at 32 bid.

New York City-based shoe retailer Nine West, which filed for bankruptcy last week, saw its paper trading up.

The 6 1/8% bonds due 2034 gained about 2¼ points to close at 19 bid. The 6 7/8% paper due 2019 rose about ½ point to close at 11 bid.

“There wasn’t much going on today,” a trader said. “Looks like it might be another dead week.”

The distressed debt market closed the week with another slow day, traders reported, with news trickling in to drive trading.

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