Community Health suffers after earnings; Intelsat keeps gaining; Murray Energy sees modest gains

By Colin Hanner

Chicago, Oct. 27 – Quarterly earnings caused some fluctuation in the distressed debt arena on Thursday, with the biggest mover, Community Health Systems Inc., stealing the show for most actively traded.

After announcing its third-quarter preliminary results late Wednesday, Community Health Systems “got bamboozled,” as one trader put it, sinking several points on various notes.

The 7 1/8% notes due 2020 were down 8½ points to 83, a trader said.

The 6 7/8% notes due 2022 traded down 8½ points to 76¾, a trader said. Another trader said he saw similar activity.

The company’s 8% notes due 2019 traded down 7 7/8 points to 89 1/8, which were down from as high as a 96 handle on Wednesday, a trader said.

Rounding out its movement were the 5 1/8% notes due 2021, which were down 4¾ points to 94, a trader said. A market source had the notes down 5¼ points to 94.

The company saw a 10% decrease in operating revenue year-over-year, from $4.846 billion to $4.38 billion, according to a release. The results were lower because of lower-than-expected volume – and therefore revenue – as well as increased costs in health insurance and other health-related expenses.

Quorum Health Group Inc., which fell 5 points during Wednesday’s trading, followed the downward trend on Thursday in its 11 5/8% notes due 2023, which were down 8 points to 72 on heavy volume, a market source said.

Earnings releasers

Communications satellite service provider, Intelsat, SA, announced its third quarter earnings on Thursday.

It reported a total revenue of $542.7 million for the three-month period ending Sept. 30 and an earnings before net interest gain of $395.6 million on the early extinguishment of debt, taxes and depreciation and amortization, according to a release.

Its Jackson-linked 7¼% notes due 2020 moved to 75¾, up ½ point on the day, a trader said. Another trader said he saw up to 1 point of movement upward.

A market source had the Jackson-linked 7¼% notes due 2019 up 1 point to 81½.

Canadian oil sands producer, MEG Energy Corp., reported stronger-than-expected earnings off near-record production volumes of 83,404 barrels per day, as well as double-digit percentage reductions in non-energy operating costs, low general and administrative expenses and non-energy operating cost guidance.

The company’s long-term debt decreased year-over-year from $5.024 billion to $4.910 billion.

Its 6½% notes due 2021 saw two heavy-volume trades and were down ½ point to 89½, a market source said.

Another market source had the 7% notes due 2024 down 2¼ points to 85½.

Other energy

St. Clairsville, Ohio-based coal company Murray Energy Corp. saw movement in its 11¼% notes due 2021, which were up 2¼ to 77¼, per one trader, and as high as 78 during the day’s trading, according to another trader.

One trader pointed to the newly launched $175 million senior secured first-lien term loan, as well as its sale of 5,900 acres of Utica shale oil reserves, as indicators of “what’s pushing the paper up.”

Some of Peabody Energy Corp.’s notes dropped again on Thursday, reversing the trend that the coal company had seen in weeks previous.

The 6½% notes due 2020 were down 1¾ points to 45¾, a trader said. Another trader said the same notes remained unchanged but were “volatile” and experienced “4-point intra-day swings.”

A market source said the notes were down 2¼ to 45¼.

The 10% notes were as low as 71½, a trader said, but closed at 75, following a similar trend of the unsecured notes.

Oil and natural gas producer EP Energy reported a $43 million third quarter loss at the end of the Wednesday from the same period last year.

Denbury Resources’ 6 3/8% notes due 2021 were down 1 point to 85, a market source said.

Breitburn Energy Partners LP’s 7 7/8% notes due 2022 traded “about where they’ve been,” at a 68 handle, a trader said, a “little lower” than what it typically trades.

News surrounding oil came with the Organization of Petroleum Countries and whether its participating countries would consider supply cuts soon. Saudi Arabia and Gulf allies would consider a 4% cut from their oil output, and OPEC Secretary-General Mhammed Barkindo said he hoped OPEC countries to be willing to be flexible to cuts.

Western Texas Intermediate crude was up 49 cents, or 1%, to $49.67.

Brent crude was up 39 cents, or 0.78%, to $50.37.

Round up

A market source said that iHeartCommunications Inc.’s 9% notes due 2022 were down ¼ point to 76¾.

Gymboree Corp.’s 9 1/8% notes due 2018, which fell as much as 17 points on Wednesday after third quarter earnings were released, per a market source, traded on Thursday but remained virtually unchanged.

They traded around 50, a market source said.

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