Oil slips again, but distressed doesn’t ‘capitulate’ as much as day prior; existing Valeant up; Intelsat slides

By Colin Hanner

Chicago, March 9 – Though movement in the distressed realm was not immune to the continued tanking of oil prices on Thursday, new issues in the high-yield realm continued to dominate the entire space on a day where the market was generally soft.

“There’s really not much in distressed” on the session, a sellside trader said, noting new issues and not as much trading in the exploration and production space as a day prior.

Crude continued to slip on Thursday, falling below the $50-per-barrel threshold on near-record trading volume.

Distressed energy and production companies were not immune to the depressed prices but did seem to take a breather from the plummeting seen on Wednesday.

“Everything fell apart yesterday” with the decline of oil prices, but it “didn’t capitulate nearly as much today.”

California Resources Corp. was down fractionally in its most popular distressed notes, and offshore driller Noble Holdings International Ltd. saw at least a multi-point loss in one heavy volume of its distressed notes.

New issues in the high-yield arena – Aramark Services, Inc. and Iamgold Corp., among others – were joined by Valeant Pharmaceuticals International, Inc.’s pricing of $2.5 billion of senior secured notes, a deal announced on Thursday.

The pharmaceutical company’s distressed notes were up on the day, a trader said.

Satellite telecommunications Intelsat SA was about ½ point lower overall in its Jackson-held bonds on Thursday, a trader said, adding that Intelsat Luxembourg Holdings SA was “a little off the top, too.”

And a few regularly-traded distressed names, including media company iHeartCommunications, Inc., were softer on the session.

Oil, and its bonds, down

As oil continued to slip, distressed E&P companies followed.

California Resources’ 8% second lien notes due 2022 were down “a little bit” to an 81½-82 zip code, a trader said, around the same levels seen following Wednesday’s session. He did note that the bonds were “very active.”

Offshore driller Noble Holdings International’s 7¾% notes due 2024 finished down 2 1/8 points to 89 7/8, a market source said.

Oklahoma City-based Chesapeake Energy Corp.’s 8% senior unsecured notes due 2025 continued to leak into distressed territory, losing 1 point to finish around a 94 handle.

Candian oil sands producer MEG Energy Corp.’s 7% notes due 2024 were down 2¼ points to 87, a market source said.

And French geoscience company CGG SA, which largely deals in E&P sphere, saw a 1¼-point decline in its 6½% notes due 2021.

Movement for crude contracts began to slide on Wednesday following the announcement of the Energy Information Administration that domestic stockpiles increased by 8.2 million barrels the previous week, a more-than fourfold increase according to various market analysts’ expectations.

The EIA data presented figures that were in direct opposition to sector-wide compliance in cuts occurring from OPEC countries, with most countries cutting more than agreed on.

Prior to Wednesday, oil had consistently fluctuated in the low-to-mid $50 range since late November when the Organization of Petroleum Exporting Countries – as well as some non-members – agreed to cut output for the first time in nearly 10 years.

Valeant prices, existent’s up

On Thursday, Valeant Pharmaceuticals announced it launched an offering of $2.5 billion of senior secured notes in two tranches that would mature in 2022 and 2024, respectively, a news release said.

Distressed notes were up in the wake of the announcement.

A trader said the 6 1/8% notes due 2025 went out with a 77¼ handle, a 1¼-point increase, while the 5 7/8% notes due 2023 finished with a 78¼ handle, a near-2 point increase.

Proceeds from the offering, as well as from a new term loan, would be used to repay particular loans and finance a tender offer for up to $600 million of the company’s outstanding 6¾% senior notes due 2018.

Intel lower

After being up for the better part of a week-and-a-half, Intelsat turned the opposite direction definitively on Thursday, traders said.

Intelsat Jackson Holdings SA’s 7¼% senior unsecured notes due 2020 were down 1 point to 92 7/8, a market source said, while the 7½% senior unsecured notes due 2022 mirrored losses with a 1-point loss to finish at 92.

And Intelsat Luxembourg Holdings’ 7¾% senior unsecured notes due 2021 were down 2 points to 61, a market source said.

A mixed bag

Things were “softer” for iHeartCommunications, Inc. on Thursday, including the 14% senior unsecured notes due 2021, which traded down ¾ point to 37 5/8, a trader said.

Santa Clara, Calif.-based technology company Avaya, Inc.’s 7% notes due 2019 were down ¾ point to 78¼, a market source said.

And Franklin, Tenn.-based hospital group Community Health Systems, Inc.’s 6 7/8% senior unsecured notes due 2022 were down ½ point to 85 5/8.

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