American Tire notes level; Community Health issues close out holiday week mixed

By James McCandless

San Antonio, July 6 – Trading in the distressed debt market continued to focus on popular names as overall volume slowed to a crawl in a week shortened by the Fourth of July holiday.

American Tire Distributors’ notes were level. Bridgestone recently announced that it would sever some ties with the company by ending its passenger tire distribution deal.

Community Health Systems, Inc. issues were mixed. Recently, a subsidiary brought a $1.3 billion offering to market.

PetSmart, Inc. paper was level. A recent lawsuit has complicated a growing dispute between the company and its creditors.

Frontier Communications Corp. notes were mixed. The chief financial officer recently announced his resignation.

Intelsat SA issues fell. The company recently announced a buyback program for its 7¾% notes due 2021.

Mallinckrodt plc paper gained in the medical space.

American Tire level

Huntersville, N.C.-based tire distributor American Tire notes were level, traders confirmed. Last Thursday, Bridgestone announced that it would end its passenger tire distribution deal with the company but not completely sever ties. A significant portion of its business has already been adversely impacted after Goodyear announced that it would end its distribution deal.

“They’re not completely in the dark yet but it’s close,” a trader said. “Whatever shift they’re planning for their online business has to outperform expectations.”

The 10¼% notes due 2022, while facing downward pressure, remained level at around 25½ bid.

On Thursday, the 10¼% notes were level at 25½ bid.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems issues were mixed for a second day, market sources confirmed. Recently, subsidiary CHS/Community Health Systems, Inc. brought a $1.03 billion offering of 8 5/8% senior secured notes due 2024 to market.

The company also announced recently that it had reached a definitive agreement to sell one of its Oklahoma hospitals to a subsidiary of Oklahoma-City based hospital facilities operator INTEGRIS Health.

The 7 1/8% notes due 2020, despite seeing negative pressure, were level at around 91 bid. The 6 7/8% notes due 2022 lost about ¼ point to close at around 49¼ bid.

On Thursday, the 7 1/8% notes were level and the 6 7/8% notes gained about ¾ point.

PetSmart level

Phoenix-based pet supplies retailer PetSmart paper was level, traders confirmed. Last Wednesday, the company filed a lawsuit against Citigroup for allegedly breaching contract as its loan agent by not cooperating with a recent equity transfer of 36.5% of e-commerce segment Chewy.com. The suit is the latest in a series of actions between the company and its creditors in a disagreement over the transfer.

The 8 7/8% paper due 2025 was level at 66½ bid.

On Thursday, 5 7/8% paper rose about 1 point and the 8 7/8% paper lost ¼ point.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed again. The company recently announced the coming resignation of CFO Perley McBride.

The 7 5/8% notes due 2024 gained about 1¼ points to close at around 69 bid. The 10½% notes due 2022 shaved off about ½ point to close at around 89 bid. The 11% notes due 2025 dropped about 1½ point to close at around 78¼ bid.

On Thursday, the 7 5/8% notes rose about ¼ point, the 10½% notes were level and the 11% notes dropped about 1 point.

Luxembourg-based satellite communications company Intelsat, another distressed telecom name, saw issues decline.

Recently, the company announced a buyback program for its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 lost about 2 points to close at around 93 bid. The 8 1/8% notes due 2023 fell about ½ point to close at around 81 bid.

On Thursday, the 7¾% notes gained about 2¼ points and the 8 1/8% notes lost about ½ point.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 rise about ¾ point to close at around 84½ bid.

“Of what little movement there was today, the majority of it was sideways,” a trader said. “The week played out like I thought it would with very low levels of volume. The holiday knocked us out of any rhythm.”

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