Sanchez Energy notes improve with rising oil futures; FirstEnergy Solutions issues continue mixed after settlement

By James McCandless

San Antonio, Aug. 29 – The distressed debt market saw trading focus Wednesday largely on similar names as the day before with the Labor Day weekend on the horizon.

Sanchez Energy Corp. notes improved, following an increase in oil futures as U.S. oil reserves decline.

FirstEnergy Solutions Corp. issues traded mixed again. On Monday, its parent company reached a bankruptcy settlement for its subsidiaries.

Diebold Nixdorf, Inc. paper rose. On Monday, the company borrowed $650 million as a rescue loan from two institutional lenders.

Intelsat SA notes were mixed for the third day this week. A subsidiary recently priced $1.25 billion of senior notes.

Frontier Communications Corp. issues fell again. A recent disappointing second-quarter earnings report led to a ratings downgrade.

Mallinckrodt plc paper gained in the medical space.

Sanchez Energy gains

Houston-based independent oil and gas producer Sanchez Energy’s notes improved, traders said, following oil futures. Oil prices continued to rise on Wednesday as U.S. crude oil inventories were declining again.

Recently, the company reported a 38 cents per share loss, missing analyst predictions of a 5 cents per share loss. A series of ratings downgrades followed the report.

“Any news in oil gets bellwethers like Sanchez moving,” a trader said.

The 6 1/8% notes due 2023 rose about 1¼ points to close at around 57¼ bid.

FirstEnergy Solutions mixed

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw issues mixed again, market sources said. On Monday, reports confirmed that the company finalized a definitive settlement agreement worth $1.1 billion in the Chapter 11 bankruptcy proceedings for FirstEnergy Solutions, FirstEnergy Nuclear Operating Co., and other subsidiaries.

The agreement reportedly covers all potential claims among the settling parties and other creditors.

The 6.05% notes due 2021 lost ½ point to close at 61½ bid. The 6.8% bonds due 2039 added ¼ point to close at 61¼ bid. The 6.85% bonds due 2034 gained ¼ point to close at 61¾ bid.

On Tuesday, the 6.05% notes gained about 2 points, the 6.8% bonds lost ¼ point and the 6.85% bonds were level.

Diebold rises

North Canton, Ohio-based connected commerce solutions company Diebold’s paper rose, traders said. Reports confirmed Monday that the company has secured a $650 million rescue loan from two institutional lenders. The company hopes to balance out its recent woes shown in its second-quarter earnings report.

Last week, JPMorgan Chase & Co. reportedly pitched a $500 million loan to prospective lenders.

The 8½% paper due 2024 rose about 2¼ points to close at around 72¾ bid.

On Tuesday, the 8½% paper was level.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed in Wednesday trading. Subsidiary Intelsat Connect Finance SA recently issued a $1.25 billion offering of senior notes due 2023.

In a recent second-quarter earnings report, the company showed a 38 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 fell about ½ point to close at around 95¾ bid. The 8 1/8% notes due 2023 were level at around 87 bid.

On Tuesday, the 7¾% notes fell ¼ point and the 8 1/8% notes rose about ¼ point.

Norwalk, Conn.-based wireline communications name Frontier Communications issues declined for a second day.

Following a recent negative earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 shaved off ½ point to close at 64 bid. The 10½% notes due 2022 lost about ½ point to close at around 89 bid. The 11% notes due 2025 fell about ¼ point to close at 78 bid.

On Tuesday, the 7 5/8% notes dipped about 1 point, the 10½% notes lost ¼ point and the 11% notes fell about ¼ point.

Staines-upon-Thames, U.K.-based drug maker Mallinckrodt’s paper gained. In a recent earnings report, the company listed a $1.78 per share profit, beating analyst predictions of $1.49 per share profit.

The 4¾% paper due 2023 rose about ½ point to close at around 87 bid.

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