Intelsat continues to gain, hospital issues still struggle; NuVasive converts trade off

By Paul Deckelman

New York, July 28 – Traders in the bonds of distressed or underperforming companies saw something of mixed bag in Friday’s dealings, mirroring a generally mixed session in the larger junk bond market.

On the upside, traders saw continued advances in Intelsat SA notes, which have gained altitude over the past several sessions after the satellite communications company posted better-than-expected results.

Hospital names such as HCA Inc. and Tenet Healthcare Corp. continued to struggle, even with uncertainty about healthcare policy in the United States apparently resolved – at least for now.

Goodyear Tire & Rubber Co.’s bonds were seen on the downside after the giant tire manufacturer reduced its fiscal 2017 earnings guidance.

Traders saw Park Aerospace Holdings Ltd.’s bonds lower in active dealings.

They said bonds of energy issues such as California Resources Corp. and Noble Energy were seen mixed, despite a fifth straight session of higher crude oil prices.

In the convertibles market, NuVasive Inc.’s convertibles skidded lower on an outright basis – although they expanded on swap – after the medical device maker reported mixed quarterly results and news that two top managers are leaving the company.

Intelsat issues up

Traders saw continued gains in Intelsat SA’s notes on Friday after the Luxembourg-based communications satellite company had reported better-than-expected quarterly results.

Its Intelsat Jackson Holdings SA 9¾% notes due 2025 jumped by 1 1/8 points on Friday to end at 103¼ bid while its 5½% notes due 2023 moved up by ¾ point to 86¼ bid, both on volume of more than $20 million.

Another trader saw the company’s 7¼% notes due 2020 firming by ¼ point to go home at 96¼ bid.

On Thursday, Intelsat reported second quarter revenues of $533 million, down slightly from market expectations – but its 20 cents per share adjusted net loss was considerably smaller than the 30 to 35 cents of red ink most analysts were forecasting.

During the company’s conference call, its chief financial officer expressed confidence in the company’s ability to meet its several billion dollars of junk bond and term loan maturities that will be coming due within the next three years.

Goodyear skids on numbers

Bad numbers from Goodyear caused the Akron, Ohio-based tire-making giant’s bonds to head lower during the session.

A market source saw its 4 7/8% notes due 2027 ending at 101½ bid, calling that a 1½ point loss on the session, with around $10 million traded.

A second trader also saw the fall in those bonds and said the company’s 5 1/8% notes due 2023 retreated by 5/8 point to end at 104½ bid.

Goodyear said that its earnings for the June 30 quarter slid to $147 million, or 58 cents per share, from $202 million, or 75 cents a year, in the year-earlier period, and also released lower guidance for the full year.

Energy mixed

A trader said that energy names were something of a mixed bag on Friday, despite a fifth straight rise in world crude oil prices.

“Some of the names have been under pressure, but failed to respond” when crude strengthened.

He said that exploration and production company California Resources’ 8% notes due 2022 fell by ¾ point to 64¼ bid, although he saw drilling contractor Noble Energy’s 7¾% notes due 2024 at 80 bid, calling that up ½ point on the day.

He said that Whiting Petroleum Corp.’s paper was “about unchanged, holding steady,” including its 5% notes due 2019 at 98 3/8 bid.

On the commodities markets, September-delivery West Texas Intermediate crude gained 67 cents per barrel on the NYMEX to end at $49.71, while North Sea Brent crude jumped by $1.03 per barrel to end London trading at $52.52.

Hospital names still ailing

The apparent end of legislative efforts to repeal the U.S. Affordable Care Act – a so-called “skinny” repeal measure narrowly failed in the Senate – and the resultant lessening of uncertainty about the law’s future did little for recently beleaguered hospital sector bonds on Friday.

While Community Health Systems Inc.’s 6 7/8% notes due 2022 “appeared to stabilize” around the 86 bid mark on volume of about $16 million, a trader said, Tenet Healthcare’s 6% notes due 2020 ended down ½ point at 107¼ bid. Community Health’s notes had started the week up around 90 bid.

HCA’s 5 7/8% notes due 2022 ended at 111 bid, down ¼ point on the day.

Park Aerospace trades off

Elsewhere, traders saw notable losses on active volume in Park Aerospace Holdings’ notes, although no one offered a ready explanation for their downturn.

Its 5½% notes due 2024 retreated by 3/8 point to 102½ bid on volume of over $19 million.

And its 5.2% notes due 2027 did even worse, a trader said, falling by 1 full point to end at 102 5/8 bid, with over $15 million having changed hands.

NuVasive knocked lower

In the convertibles market, NuVasive’s paper skidded lower on an outright basis but expanded on swap on Friday after the San Diego-based medical device maker reported mixed quarterly results and news that two top managers are leaving the company.

NuVasive said that chief operating officer John Hannon was leaving the company to pursue other interests and that chief financial officer Quentin Blackford resigned, effective Aug. 25.

The departures rattled investors, sending the company’s shares down more than 12%.

The NuVasive 2.25% convertibles due 2021 fell 15 points on an outright basis in busy dealings, but were up 2 points on a dollar-neutral, or hedged, basis amid a spike up in volatility, a New York-based trader said.

The spine surgery products maker reported revenue that was lower than some estimates but reported adjusted earnings that were better than expected.

The NuVasive convertible bonds were quoted at 127.63 against a stock that was down $9.39, or 12%, at $67.51.

But the shares fell even farther by late afternoon, dropping $10.43, or 14% to $66.47.

Along with the departure of the COO, the company announced some promotions.

The resignation of CFO Blackford was unrelated to the organizational updates. Blackford is leaving the company to pursue another opportunity outside the spine industry, according to a company news release.

Board member Vicky Capps will help with the transition and to find a new CFO.

-Rebecca Melvin contributed to this review

© 2015 Prospect News.
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