Distressed market finishes week active; energy and telecom stalwarts heavily traded

By James McCandless

San Antonio, Jan. 26 – The end of the week in the distressed debt market Friday looked much like it did at the start of the week, according to traders. Familiar names saw high volume trading, but many of them ended near their Monday starting levels, with some exceptions.

The week’s most active names were telecom mainstays Frontier Communications Corp., which made changes to its credit agreements, and Intelsat SA.

One of the week’s top gainers was Community Health Systems, Inc. after market sources reported at the beginning of the week that investment firm BlackRock, Inc. increased its ownership position in the Franklin, Tenn.-based hospital operator.

After generally positive oil news on multiple fronts, distressed energy names California Resources Corp. and Denbury Resources Inc. remained at the forefront in distressed oil and gas companies.

Other heavily traded, previously declining notes saw gains to end the week, namely J.C. Penney Co., Inc., iHeartMedia Inc. and Hexion Inc.

Telecom dominates week

Frontier Communications’ notes continued to trend upward after the week’s news that the Norwalk, Conn.-based wireline telecom firm sought and attained changes to its credit agreements in order to have more flexibility to pay debts, according to a trader.

Its 10½% notes due 2022 ended an active week at just above 83½ bid. The 11% notes due 2025 kept rising to finish around 79 bid.

The 7 3/8% notes due 2024, however, lost much of the week’s gains to finish at 67 bid.

Luxembourg-based communications satellite operator Intelsat SA experienced familiar levels of high volume trading.

Its Intelsat Jackson SA 7¼ % notes due 2020 moved higher to end the week at above 87 bid from 86¾. The company’s Intelsat (Luxembourg) SA 8 1/8% notes due 2023 lost 2 points to end at 42 bid while the 7¾% notes due 2021 dropped a few points to about 45 bid.

Community Health up again

Community Health Systems’ notes maintained an upward trend in the week’s trading after Securities and Exchange Commission filings disclosed that investment firm BlackRock had increased its ownership position in the company to 13%, a trader said.

Its 8% notes due 2019 gained ¼ point to end at 93½ bid. The 6 7/8% notes due 2022 rose 4 points on the week to finish at about 71½ bid.

Oil and gas active

As oil prices remained stable and representatives for Saudi Aramco told the World Economic Forum in Davos, Switzerland that there would be no increase in oil production, oil and gas companies remained heavily traded, according to a market source.

The 5½% notes due 2022 for Plano, Texas-based oil and natural gas exploration and production company Denbury Resources rose ½ point to close at near 79 bid.

Los Angeles-based energy company California Resources’ 6% notes due 2024 dropped more than 1 point to end at around 75¼ bid while its 8% notes due 2022 lost 2½ points to end at 86½ bid.

Distressed names busy, firm

Traders said that there was high-volume trading Friday that drove certain notes upward that had been declining during the week.

Plano, Texas-based retailer J.C. Penney’s 7.4% bonds due 2037 rose ¼ of a point to end at 72¾ bid while its 7 5/8% bonds due 2097 shot up a few points to close at about 69 bid.

San Antonio-based broadcasting and outdoor advertising company iHeartMedia’s 10 5/8% notes due 2023 traded up to end at 72¼ bid.

Another name that traded heavily Friday was Columbus, Ohio-based chemical company Hexion, whose 9% notes due 2020 climbed more than 3 points to end at almost 77½ bid. The 6 5/8% notes due 2020 gained 2 points to close at 91¼ bid.

A trader described the week as a lateral move overall.

“We went sideways,” the trader said. “We ended up a little firmer at the end of the week, but not a lot changed.”

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