Under Armour drops into distressed territory; Community Health gains; pharma goes up; Intelsat quiets

By Colin Hanner

Chicago, Feb. 1 – Trading in the distressed arena mirrored the equity market in its quietness on Wednesday, market sources said, with the most-actively traded issues not veering far from where they started the day, except for one retailer that fumbled into distressed trading levels on the session.

Though not considered uniquely distressed, traders said a series of Under Armour, Inc. securities traded down several points to stressed territory on heavy volume following weaker-than-projected quarterly results and ensuing downgrades by two ratings agencies.

Community Health Systems, Inc. continued to see gains from Tuesday’s session though a trader said a bit of news from the healthcare industry seemed to push the Franklin, Tenn.-based hospital group up further.

Distressed pharmaceutical staples Valeant Pharmaceuticals International, Inc. and Concordia International Corp. traded mixed a day following a sit-down between President Trump and pharmaceutical giants.

Luxembourg-based Intelsat SA saw a slight uptick in at least one series of its notes across its subsidiaries but was flat in others.

Global shipper Navios Maritime Holdings, Inc. traded up higher in two sets of securities, Acosta, Inc. returned to the top of the most-active list with a marginal increase of its own, and iHeartCommunications, Inc. followed with a slight gain on an overall soft session.

Under Armour going under

A day following the release of quarterly results that underperformed expectations and cut the company’s stock price by more than a quarter, one of Under Armour’s bonds traded in distressed territory.

“There were a lot of trades in Under Armour,” a trader said.

Wednesday brought two downgrades to Under Armour from Moody’s Ratings Service, which dropped the retailer to negative from stable, and Standard & Poor’s, which lowered the company to a junk rating.

“The revised guidance reflects the challenges the company faces with balancing aggressive global growth while navigating a challenging North American apparel retail environment, a market in which it remains significantly concentrated,” Moody’s said in press release.

A trader said the 3¼% notes due 2026 finished the day down 2 points to 90½, though there were high-volume trades as low as 87½ earlier in the day.

Community Health strong

For the second-straight session, Community Health bonds finished stronger amid positive news coming out of the sector.

On Tuesday, it was the contagion from solid earnings of fellow hospital group HCA Holdings, Inc. that sparked a modest bump in Community Health’s securities, and on Wednesday, a trader said an article about higher copays applied at hospitals with poor entrance – citing Community Health and Quorum Health Corp. as examples – seemed to influence the notes’ movement.

Community Health’s 6 7/8% notes due 2022 were up “marginally” to 74, a not-even 1/8-point increase, a trader said.

The 8% notes due 2019 were up “almost a point” to 90 1/8, the trader said.

Pharma on the up

In the previous session, distressed pharmaceutical companies Concordia International and Valeant Pharmaceuticals were down, albeit marginally, after President Trump met with executives of the pharmaceutical industry to discuss topics that have sent the drug sector into a whirlwind at the whim of the president’s comments.

Yet, both did an about-face on Wednesday.

Concordia announced that it had paid, with cash on-hand, the second and final installment of £72 million, plus interest of approximately £1.5 million, to Cinven relating to Concordia's 2015 acquisition of Amdipharm Mercury Ltd., according to a press release.

The Oakville, Ontario-based company’s 9% notes due 2022 were up 1¾ points to 87 on a couple of trades, a trader said.

Though there was no specific news coming out of Valeant, its 5 7/8% notes due 2023 were up 5/8 point to 76 7/8.

Intelsat soft and firm

Telecommunication satellite company Intelsat SA has been resurging the past few sessions, though quieted a bit on the session.

Intelsat Connect Finance SA., a somewhat-newly created company that sits between Luxembourg and Jackson, was flat in its 12¼% notes due 2022, which remained at 64½.

Firming just a bit were Intelsat Jackson Holdings SA’s 7¼% notes due 2020, which were up an 1/8 point to 78 7/8 on a “handful of trades,” a trader said.

Navios sails higher

Building on Tuesday gains, Navios’ 7 3/8% notes due 2022 were up 5/8 points to 70¼, a trader said, building on its more-than 5-point gain since Friday’s session.

Also inching higher were its 8 1/8% notes due 2019, which were up 1 point to 79.

Distressed wrap-up

Staying within the 37 zip code, as it has been for several sessions, iHeartCommunications, Inc.’s 14% notes due 2021 were down ¼ point to 37¼, a market source said.

Marketing and retailer merchandiser Acosta, Inc.’s 7¾% notes due 2022 were up 3/8 point to 88½, about a point less than its Friday’s levels when it traded actively.

And offshore driller Transocean Ltd.’s 6.80% notes due 2038 were down 1/8 point to 80 3/8.

© 2015 Prospect News.
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