Wirelines firm, Altice battered; CalRes climbs but other oils lag; semiconductor converts lower

By Paul Deckelman

New York, Nov. 30 – Traders in distressed debt and the bonds of otherwise underperforming companies and sectors saw a mixed market on Thursday, with no clear trend standing out.

Domestic wireline telecommunications names like Frontier Communications Corp., Windstream Services and CenturyLink, Inc. were seen better on the day but European telecom operator Altice’s various issues were broadly and deeply lower.

Energy sector bellwether credit California Resources Corp. was solidly higher in active trading, in line with an upturn in world crude oil prices after three sessions on the downside.

But sector peers like Denbury Resources Inc. and MEG Energy Corp. failed to keep pace.

Hospital names like Community Health Systems Inc. and Tenet Healthcare Corp. ended the day on the upside.

In the convertibles market, Lam Research Corp.’s 2.65% convertible notes due 2041 and 1.25% convertible notes due 2018 solidified their nosedive seen on Wednesday with active trading on Thursday that was more than 50 and 30 points lower than trades earlier in the week.

Convertibles from other semiconductor companies were meantime actively traded with slight drops as confidence in the future growth potential of semiconductor companies began to shake.

Wireline names firm up

The recently weakened wireline telecommunications sector was mostly better on Thursday, led by Stamford, Conn.-based Frontier Communications’ 11% notes due 2025, which gained 5/8 point on the day to end at 77 3/8 bid, on brisk volume of more than $17 million.

The company’s 8½% notes due 2020 were 1½ points better at 92 ¾ bid.

Little Rock, Ark.-based sector peer Windstream Services’ 7¾% notes due 2021 were seen by a trader to have jumped as much as 3 points on the day, closing at 78 bid, while Monroe, La.-based CenturyLink’s 7.6% bonds due 2039 were up some 2¼ points to 86 9/32 bid.

While those domestic operators popped, European telecom operator Altice’s various bonds dropped.

Its financing unit’s 7¾% notes due 2022 slid by 2¾ points on the day to 95¼ bid, with over $31 million traded, while its 7 5/8% notes due 2025 were down by the same amount to 91¾ bid, on over 414 million of volume.

The company’s SFR Group subsidiary’s 7 3/8% notes due 2026 lost ¾ point on the session to close at 100¾ bid, while over $34 million of those notes changed hands.

CalRes hot, sector peers not

In the energy realm, a trader said that California Resources’ sector bellwether 8% issue due 2022 was up by 1½ points on the day at 74 3/8 bid, “with oil up on the day and with the market [being firmer] in general.”

More than $24 million of the Los Angeles-based oil and natural gas exploration and production company’s notes were traded.

January-contract West Texas Intermediate crude gained 10 cents per barrel on the New York Mercantile Exchange Thursday to settle at $57.40, its first gain after three straight days of losses including Wednesday’s 69 cent pullback.

The expiring contract for January-delivery North Sea Brent crude firmed by 46 cents per barrel in London trading, ending at $63.57, after losing 50 cents on Wednesday, its third straight downturn.

But those gains did not translate into strength for such sector names as Plano, Texas-based Denbury Resources, whose 6 3/8% notes due 2021 lost 1½ points to end at 72 bid, while Calgary, Alta.-based MEG Energy’s 7% notes due 2024 were down ¼ point to close at 90½ bid.

Hospital names healthier

Among hospital operators, traders said that Franklin, Tenn.-based Community Health Systems’ 6 7/8% notes due 2022 gained ¾ point on the day to end at 60½ bid, with over $13 million traded.

Dallas-based sector peer Tenet Healthcare’s 6% notes due 2020 were ½ point gainers, ending at 105¾ bid.

Lam leads chip converts lower

In the convertibles space, semiconductor companies were in focus during Thursday’s trading session, with some chip makers taking a nosedive and others faltering after a report warned the spectacular rise of the semiconductor industry was coming to an end.

While some sources have said the semiconductor industry will continue to have large upside potential well into the future, others felt investors would be wise to be cautious.

The convertibles and underlying shares of semiconductor companies stand poised for large losses if the cycle were to turn, a market source said.

Lam Research’s paper – battered around on Wednesday – continued to take its lumps on Thursday, traders said.

Its 2.65% convertible notes due 2041 nosedived Wednesday and then solidified that plunge by trading Thursday in the 582 to 588 range throughout the session before ending the day at 582.714, according to Trace data.

The notes saw a 52 point decrease from Wednesday’s closing trade of 634.37, according to Trace data. The notes were trading between 573 and 584 on Wednesday prior to the closing trade.

The company’s 1.25% convertible notes due 2018 also continued their downward spiral and were trading in the 320 to 323 range before closing the day at 316, according to Trace data.

The notes had been in the 350 range prior to a Morgan Stanley report that questioned the future growth potential of semiconductor companies. Lam stock also continued to fall ending the day at $192.33, a decrease of 1.19%.

Elsewhere in the sector, Teradyne Inc.’s 1.25% convertible notes due 2023 saw some action in the convertible space but with little movement in trading price. The 1.25% notes from the developer and supplier of automatic test equipment used by semiconductor manufacturers was trading in the 139 to 141 range before closing the day at 139.108, according to Trace data.

The convertible notes were trading in the 144 to 147 range in the lead up to the report. Teradyne stock was also down closing the day at $40.47, a decrease of 0.86%.

Micron Technology’s 3% convertible notes due 2043 also saw some activity during Thursday’s session, making some gains but slipping by the end of the day. The notes traded to a high of 155 but ended at 148.8, according to Trace data.

Micron stock also slipped down to $42.39 at market close, a decrease of 3.09%.

-Abigail W. Adams contributed to this review

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