Community Health notes stay active after hospital closure talk; iHeart mixed after forgoing interest

By James McCandless

San Antonio, March 1 – The distressed debt market experienced another day of lower volume, traders reported, with some exceptions from news-driven names.

Community Health Systems, Inc. notes were some of the most traded of the session after Tuesday’s Q4 report in which chief executive officer Wayne Smith made comments about potential hospital closures.

iHeartMedia, Inc. issues were mixed after the company announced that it will forgo paying interest on two tranches.

Another name that reported on Tuesday was Frontier Communications Corp., which also announced the suspension of its quarterly dividend, leading its paper to another day of high volume.

Intlesat SA, bolstered by recent positive comments about the country’s 5G network, also took up telecom space. Another slight decline in oil futures led to activity for Ensco plc and EP Energy Corp. Mallinckrodt plc added to volume in the healthcare sector.

Community Health down again

Franklin, Tenn.-based hospital operator Community Health Systems notes traded down Thursday, a market source confirmed. On Tuesday, on an earnings call where a $2 billion net loss was recorded for the fourth quarter of 2017, CEO Wayne Smith told stakeholders to expect more hospital closures this year. The company sold off 30 hospitals in 2017.

The 7 1/8% notes due 2020 fell sharply by 3½ points to close at 81 bid. The 6 7/8% notes due 2022 fell 1½ point to close at 63½ bid.

iHeart skips interest payment

Some issues in San Antonio-based outdoor communications company iHeartMedia were mixed after subsidiary iHeartCommunications announced that it would be forgoing interest payments on its 11¼% priority guarantee notes due 2021 and 9% priority guarantee notes due 2021 (see related story elsewhere in this issue).

“It’s looking to be a pattern for them to skip these payments,” a trader said.

Its 7¼% issues due 2027 rose 3¾ points to close at 23¼ bid. The 2% issues due 2021 dropped ¾ point to close at 12¼ bid.

Frontier active again

Norwalk, Conn.-based wireline telecom name Frontier Communications saw another day of active paper after releasing its Q4 report on Tuesday while also announcing that it would be rescinding its quarterly dividend in order to expand its flexibility in paying down debt.

The 7 6/8% paper due 2024 lost 1½ point to close at about 62 bid. The 10½ paper due 2022 fell about ½ point to close at 84½ bid. The 11% paper due 2025 traded down 1¾ point to close at 76¼ bid.

Volume favorites trade

Notes in Luxembourg-based satellite communications company Intelsat saw a third day of increased activity after Tuesday’s comments by FCC chairman Ajit Pai in which he proposed changes to the U.S. 5G network that would be potentially beneficial to Intelsat and similar satellite names.

The Intelsat Jackson SA 5½% notes due 2023 ticked up almost ¼ point to close at about 83¼ bid. The 7¼% notes due 2020 gained 1 point to close at 93¾ bid.

A negative day for oil futures drove trading in distressed energy names.

Britain-based oil and gas driller Ensco’s 5¾% bonds due 2044 dropped about 1½ point to close at 67¾ bid.

Houston-based independent oil and gas producer EP Energy saw its 7¾% issues due 2022 shave off 3 points to close at 66 bid.

Britain-based drug maker Mallinckrodt continues to be another distressed name dominating the healthcare space after recently announcing the completion of the $1.2 billion acquisition of Rockville, Md.-based medical applications name Sucampo Pharmaceuticals.

The 4¾% notes due 2023 lost 3½ points to close at about 79 bid.

“I’m just happy that we’ve put last month away,” a trader said. “It was really bad for us. March is looking better but we can’t be too sure now.”

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