Community Health notes begin week mixed; American Tire continues climb amid reorganization

By James McCandless

San Antonio, July 30 – The distressed debt market kicked off the week with trading continuing to concentrate on newsworthy names.

Community Health Systems, Inc. notes were mixed to start the week’s trading. The company released a better than expected Q2 earnings report.

American Tire Distributors issues saw a fourth day of gains after the company announced a round of layoffs last week as it begins its reorganization strategy.

Intelsat SA paper was mixed. The Federal Communications Commission is considering a rule change that could create a new revenue stream for satellite firms.

Frontier Communications Corp. notes were mixed for a third day. CFO Perley McBride is resigning from the company.

Ultra Petroleum Corp. issues declined, following oil futures.

Endo International plc paper traded up in the medical space.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems notes started the week mixed, traders confirmed. Last Thursday, the company surprised analysts by releasing a stronger than expected Q2 earnings report. The company reported a 1 cent loss per share and $3.5 billion in net operating revenues, both exceeding estimates.

In an earnings call Friday, chief executive officer Wayne Smith said that the company is on the right track, touting the string of asset sales made this year as part of its debt reduction plan.

“I think we are where we think we have a sustainable group of hospitals in sustainable markets, which I’ve said several times, that will work for the future and generate growth for us,” Smith said.

The 7 1/8% notes due 2020 picked up about 2 points to close at around 89 bid. The 6 7/8% notes due 2022 were level at around 49 bid.

On Friday, the 7 1/8% notes lost about ¼ point and the 6 7/8% notes fell about ½ point.

American Tire rises again

Huntersville, N.C.-based tire distributor American Tire issues trended positive for the fourth consecutive trading day, market sources confirmed. As part of its reorganization efforts, the company announced last Wednesday that it would be laying off 100 employees in its marketing subsidiary Tire Pros, refocusing on seeking new business. Goodyear and Bridgestone recently ended distribution deals with the company.

The 10 ¼% notes due 2022 added about 3 points to close at 42 bid.

On Friday, the 10¼% notes rose about 3 points.

Intelsat mixed

Luxembourg-based satellite communications company Intelsat notes were mixed. The FCC is considering a rule change that would let mobile providers use airwaves currently being used by traditional broadcasters and managed by satellite firms, potentially opening up a new revenue stream for satellite companies.

The market is awaiting the release of its earnings reports before the market opens Tuesday.

The Intelsat (Luxembourg) SA 7¾% paper due 2021 gained ¼ point to close at 95¼ bid. The 8 1/8% paper due 2023 lost about ¼ point to close at 85 bid.

On Friday, the 7¾% paper rose about 1¼ points and the 8 1/8% paper gained about ½ point.

Volume names trade

Norwalk, Conn.-based wireline communications name Frontier Communications notes were mixed again.

The 7 5/8% notes due 2024 fell about 1 point to close at 67½ bid. The 10½% notes due 2022 rose about ¾ point to close at around 90½ bid. The 11% notes due 2025 shaved off about ¼ point to close at around 80¾ bid.

On Friday, the 7 5/8% notes gained about 1¾ points, the 10½% notes lost about ¾ point and the 11% notes shed 1¼ points.

Houston-based independent oil and gas company Ultra Petroleum issues fell.

“They were most likely following oil futures,” a trader said.

The 6 7/8% notes due 2022 lost about 3¾ points to close at 65¾ bid. The 7 1/8% notes due 2025 fell 3 points to close at 60½ bid.

Dublin-based drug maker Endo International saw paper trade up.

The 6% paper due 2025 rose about ½ point to close at 79½ bid. The 6% paper due 2023 edged up ¼ point to close at 84½ bid.

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