PetSmart notes decline after new CEO announced; Community Health issues mixed for a second day

By James McCandless

San Antonio, May 21 – Traders reported a typically slow Monday in the distressed debt market, compounded by the coming of Memorial Day weekend.

PetSmart Inc. notes fell after the company announced that it has selected retail executive J.K. Symancyk as its new chief executive officer after a nine-month search.

Community Health Systems, Inc. issues were mixed for a second day after a subsidiary announced Friday that it would be extending an early payout deadline for three series of notes.

J.C. Penney Co., Inc. bonds traded down as the market continues to react to the release of the retailer’s subpar Q1 report last Thursday.

Intelsat SA paper was up. Recently, the company released a disappointing Q1 report. Elsewhere in telecom, Frontier Communications Corp. notes were mixed. Mallinckrodt plc issues jumped up in the medical space.

PetSmart down

Phoenix-based pet supplies retailer PetSmart notes declined, traders confirmed, after the company announced that it would be hiring J.K. Symancyk, president and CEO of Academy Sports + Outdoors, as its new chief executive officer.

The company’s notes have been on a downward trend recently after Amazon.com, Inc. announced that it would be offering an in-house brand of dog food for subscribers to its Prime service.

“They announced their CEO pick today, and not many people seemed to approve,” a trader said. “It didn’t instill the confidence that was intended.”

The 5 7/8% notes due 2025 lost 1 point to close at 66¾ bid. The 8 7/8% notes due 2025 fell 1¼ points to close at 50¾ bid.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems issues were mixed, market sources confirmed. On Friday, subsidiary CHS/Community Health Systems, Inc. announced that it would be extending an early payout deadline for three series of notes to 5 p.m. ET on May 22 from 5 p.m. ET on May 17.

The company is currently in the middle of executing its plan to reduce its debt, which includes holding asset sales and laying off corporate employees.

The 7 1/8% notes due 2020 shaved off about ¼ point to close at 81¾ bid. The 6 7/8% notes due 2022 were level at about 53¾ bid.

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

J.C. Penney declines

Plano, Texas-based department store chain J.C. Penney bonds fell, traders reported. On Thursday, the company released its Q1 report, highlighting a 4.1% decrease in revenue year-over-year and a 22 cent loss per share, missing analyst estimates.

The 7.4% bonds due 2037 lost about 1 point to close at around 64¾ bid.

On Friday, the 7.4% bonds gained about 1¾ points.

Volume names trade

Luxembourg-based satellite communications company Intelsat paper gained on the day. A recent Q1 report showed a 56 cents per share loss, falling short of analyst predictions of 41 cents per share.

The Intelsat (Luxembourg) SA 7¾% paper due 2021 rose about 1¼ point to close at 81¼ bid. The 8 1/8% paper due 2023 gained ¾ point to close at 73¼ bid.

Norwalk, Conn.-based wireline name Frontier Communications, another heavily traded distressed telecom, saw notes mixed on Monday. Last week, the company beat analyst estimates by reporting a Q1 loss of 58 cents per share and $2.2 billion in revenue.

The 7 5/8% notes due 2024 lost ½ point to close at 68½ bid. The 10½% notes due 2022 fell about ¾ points to close at around 91 bid. The 11% notes due 2025 were level at 81 bid.

Britain-based drug maker Mallinckrodt saw its 4¾% issues due 2023 jump up about 3 points to close at 82 bid.

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