Windstream notes mixed as debt-default trial begins; PetSmart improves as market awaits next move

By James McCandless

San Antonio, July 24 – Traders in the distressed debt market reported an increase in volume across the board on Tuesday, as the majority of activity continued to center on news-driven names.

Windstream Holdings, Inc. notes were mixed as the company’s debt-default trial focused on a 2015 spinoff and whether a default has occurred.

PetSmart, Inc. issues improved as the market continued to watch for developments in a recent dispute with the company’s creditors.

Intelsat SA paper gained. A recent move by the Federal Communications Commission could lead to new sources of revenue for satellite firms.

Frontier Communications Corp. notes were mixed. The company’s chief financial officer recently announced his departure.

Sanchez Energy Corp. issues rose. The company’s chief operating officer recently submitted his resignation.

Mallinckrodt plc paper reversed Monday’s fall in the medical space.

Windstream mixed

Little Rock, Ark.-based network communications solutions name Windstream’s notes were mixed, traders confirmed, as a trial got underway versus Aurelius Capital Management over whether a 2015 spinoff of its real estate investment trust business and leaseback of assets into Uniti Group constituted a default on its debt. Windstream is claiming that the hedge fund is trying to push it towards bankruptcy.

“Windstream notes are going to be topical for awhile,” a trader said. “They’re in a bit of a tough spot right now. This trial has to go their way to have a better chance of staying afloat.”

The 7¾% notes due 2021 lost about 2½ points to close at around 75 bid. The 7½% notes due 2022 gained 2½ points to close at 66½ bid. The 6 3/8% notes due 2023 lost about 2¾ points to close at around 56 bid.

PetSmart up

Phoenix-based pet supplies retailer PetSmart issues improved, market sources confirmed, as the market waits for the next shoe to drop in a recent dispute between it and its creditors over a recent equity transfer. The company shifted a large stake of e-commerce segment Chewy.com into private equity and out of the hands of creditors.

“These were some of the more popular tranches today,” a trader said. “The next development might come out of the debt sponsor, but right now its ‘hurry up and wait.’”

The 5 7/8% notes due 2025 edged up about ¼ point to close at around 78½ bid. The 8 7/8% notes due 2025 gained about ½ point to close at around 68¾ bid.

Intelsat gains

Luxembourg-based satellite communications company Intelsat paper saw an upswing, traders confirmed. The FCC recently signaled that it would consider a rule change allowing mobile providers to access airwaves currently restricted to traditional broadcasters and managed by satellite firms, potentially opening up a new revenue stream for satellite firms.

The Intelsat (Luxembourg) SA 7¾% paper due 2021 rose about 3¼ points to close at around 97½ bid. The 8 1/8% paper due 2023 picked up about 1¾ points to close at around 84¾ bid.

On Monday, the 7¾% paper was level and the 8 1/8% paper lost about 2 points.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications’ notes ended mixed. CFO Perley McBride recently tendered his resignation.

The 7 5/8% notes due 2024 shaved off about ¾ point to close at 67½ bid. The 10½% notes due 2022 gained ½ point to close at 89¼ bid. The 11% notes due 2025 advanced about 1½ points to close at around 78½ bid.

On Monday, the 7 5/8% notes fell about ¼ point, the 10½% notes lost about ½ point and the 11% notes declined about 1½ point.

Houston-based independent oil and gas producer Sanchez Energy issues rose. Recently, the company announced the resignation of COO Christopher Heinson.

The 6 1/8% notes due 2023 picked up about ¼ point to close at around 68 bid.

On Monday, the 6 1/8% notes lost about ¼ point.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 pick up ¾ point to close at 83 bid.

On Monday, the 4¾% paper lost about ½ point.

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