Intelsat notes climb on potential FCC rule change; American Tire issues rise as market awaits its next move

By James McCandless

San Antonio, July 12 – The distressed debt market continued to see a steady rise in activity on Thursday and is poised to see more overall volume on catalyts like earnings reports.

Intelsat SA notes continued to rise as the Federal Communications Commission weighs a proposal to allow mobile operators to access part of the U.S. C-band spectrum.

American Tire Distributors issues gained as investors anticipate a conference call with the company on the heels of Bridgestone ending its passenger tire distribution deal.

Sanchez Energy Corp. paper improved after the company announced late Tuesday that its chief operating officer had resigned.

Frontier Communications Corp. notes were mixed. Recently, chief financial officer Perley McBride resigned.

Wind Tre SPA issues were level but in high volume prompted by CK Hutchinson’s purchase of the company earlier this month.

PetSmart, Inc. paper saw more losses. The company’s recent lawsuit against its former loan agent is the latest in a dispute between it and creditors.

Intelsat up

Luxembourg-based satellite communications company Intelsat notes rose again, traders confirmed, driven by reports that the FCC is considering a rule change that would allow mobile providers to use airwaves currently limited to traditional broadcasters. Intelsat and other satellite companies support the change, opening the door for those companies to enact a fee structure to allow and manage airwave usage.

Also on Thursday, Moody’s Investor’s Service changed the company’s outlook to stable and affirmed its corporate family rating and probability of default rating (see related story elsewhere in this issue).

“If this change goes through, that potentially opens up a huge revenue stream,” a trader said. “Investors seem very optimistic about what’s in store if the FCC decides in their favor.”

Recently, the company announced a buyback program for its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 gained ½ point to close at 94½ bid. The 8 1/8% notes due 2023 jumped up 2½ points to close at 84¼ bid.

On Wednesday, the 7¾% notes were level and the 8 1/8% notes rose ¼ point.

American Tire gains

Huntersville, N.C.-based tire distributor American Tire issues improved, market sources confirmed, as investors anticipate a Friday conference call where executives are expected to outline next steps after Bridgestone ended its passenger tire distribution deal with the company.

“We’re all waiting for what they plan to do to get out of the trouble they’re in,” a trader said. “I think they should be looking at some kind of restructure.”

The 10¼% notes due 2022 rose 1¾ points to close at 28¼ bid.

On Wednesday, the 10¼% notes gained about ¾ point.

Sanchez Energy rises

Houston-based independent oil and gas producer Sanchez Energy’s notes gained, traders confirmed. On Tuesday, the company announced the departure of COO Christopher Heinson. Chief executive officer Tony Sanchez praised Heinson for helping position the company as a major player in the Eagle Ford shale.

The 6 1/8% notes due 2023 edged up about ¼ point to close at 68¼ bid.

On Wednesday, the 6 1/8% notes lost about 3 points.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications’ notes were mixed again, adding to the activity in the distressed telecom space. The company recently announced the coming departure of CFO Perley McBride.

The 7 5/8% notes due 2024 lost about 2 points to close at around 67¾ bid. The 10½% notes due 2022 picked up about ½ point to close at 90½ bid. The 11% notes due 2025 gained about ¼ point to close at around 80¼ bid.

On Wednesday, the 7 5/8% notes gained 1 ¼ points, the 10½% notes lost ¼ point and the 11% notes rose about 1½ points.

Milan-based fixed and mobile telecom provider Wind Tre issues rose. Earlier this month, Hong Kong conglomerate CK Hutchison Holdings Ltd. purchased the company for more than $2.8 billion.

While active and gaining recently, the 5% notes due 2026 were level at 92½ bid.

Phoenix-based pet supplies retailer PetSmart paper declined. A recent lawsuit filed against former loan agent Citigroup over an alleged breach of contract concerning an equity transfer is the latest in a dispute between the company and its creditors.

The 5 7/8% paper due 2025 lost about ¼ point to close at 77¾ bid.

On Wednesday, the 5 7/8% paper lost about ¾ point and the 8 7/8% paper fell 1½ points.

“The volume is coming back up,” a trader said. “So the volume is there but there’s not much volatility. That could change once we see some earnings roll in.”

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