Noble Energy climbs as it completes asset sale; FirstEnergy jumps on possibility of aid from Ohio

By James McCandless

San Antonio, April 13 – The distressed debt market closed the week with another slow day on Friday, traders reported, with news trickling in to drive trading.

Noble Energy Inc. notes were up as the company announced the completion of the sale of its Gulf of Mexico assets.

FirstEnergy Solutions Corp. issues rose due to the rise of the potential for financial assistance from the state of Ohio as hopes of help from the federal government dwindle.

Community Health Systems, Inc. paper ended mixed a day after the company announced a round of corporate layoffs.

Frontier Communications Corp. notes were mixed as the distressed telecom name seeks a buyer for certain assets. Intelsat SA issues were up. Mallinckrodt plc notes declined again as the company fends off a lawsuit over a drug’s price. Ensco plc bonds traded up.

Noble Energy completes sale

Houston-based independent oil and gas producer Noble Energy notes traded up as the company announced that it had completed the sale of its deepwater Gulf of Mexico assets to Fleetwood Energy LLC for $710 million, according to reports.

The deal will be paid for with $480 million in cash while Fleetwood assumes $230 million in liabilities. The company plans to use the proceeds to fund a portion of its $750 million share buyback program.

The 6.2% bonds due 2040 rose about 2½ points to close at around 68¼ bid. The 8.95% bonds due 2045 gained about ¾ point to close just above 87 bid.

FirstEnergy rises

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw issues rise, traders confirmed, amid the prospect that the state of Ohio will pass a zero-emission nuclear credit bill to keep at-risk power plants open.

The bankrupt name has been petitioning Secretary of Energy Rick Perry to use his authority to guarantee profitability to the plants, a move Perry has expressed reluctance about despite President Trump’s support.

“At this point, Ohio is more likely to do something about it than the federal government,” a trader said.

The 6.05% notes due 2021 traded up 2 points to close at 32 bid. The 6.8% bonds due 2039 rose 2½ points to close at 32 bid.

On Thursday, the 6.05% notes fell ½ point and the 6.8% bonds fell ¼ point.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems paper ended the week mixed, a market source confirmed, after the company announced on Thursday that it had laid off at least 70 employees from its corporate headquarters this week.

This is the latest move the company has taken to tackle its debt problem, most recently completing a series of planned hospital sales.

The 7 1/8% paper due 2020 lost about ¼ point to close at 83 bid. The 6 7/8% paper due 2022 rose ¼ point to close at 58¼ bid.

The 7 1/8% paper lost ½ point and the 6 7/8% paper was level at 58 bid on Thursday.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications notes closed the week mixed as the company searches for buyers for certain assets.

The 7 5/8% notes due 2024 rose about 1 point to close at 64½ bid. The 10½% notes due 2022 received downward pressure but remained level at about 87¾ bid. The 11% notes due 2025 shaved off about ¼ point to close at around 77½ bid.

Luxembourg-based satellite communications company Intelsat saw its Intelsat Jackson SA 5½% notes due 2023 gain ¼ point to close at 83¼ bid. The 7¼% notes due 2020 rose ¼ point to close at 95¾ bid.

Britain-based drug maker Mallinckrodt’s notes continue to slide after reports of a lawsuit emerged this week. A former employee claims the company consistently raised the price of a drug without knowing the contents.

The 4¾% notes due 2023 dropped about ¾ point to close at around 73¼ bid. On Thursday, the notes lost about 2½ points.

In energy, Britain-based oil driller Ensco saw its 5¾% bonds due 2044 edge up about ¼ point to close at around 70¾ bid.

“Besides news-heavy stuff, it’s been a pretty bad week,” a trader said. “But the signs are there that the equity markets are stabilizing, so we could see more activity as people become more confident.”

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