Community Health, Tesla, Murray Energy bonds on the rebound after slide; Frontier fall continues

By Paul Deckelman

New York, Nov. 2 – Traders in distressed debt and bonds of underperforming companies saw a marked turnaround in some names which have lately been under a lot of pressure.

They noted that electric car manufacturer Tesla Inc.’s notes – probably the busiest junk bond name of the day – came off their lows after sliding badly on Wednesday in the wake of the company’s report of a big loss and production delays.

Hospital operator Community Health Systems, Inc.’s paper, which had also been on the slide on Wednesday after the company posted osting disappointing numbers, were also up from the plunge they took late in the day on Wednesday.

And coal miner Murray Energy Corp.’s notes were solidly higher on the day.

But telecom services provider Frontier Communications Corp.’s paper continued on its downward path.

Names on the rebound

Traders saw some names which had taken a drubbing on Wednesday managing to regain some of that lost ground.

A market source noted that Tesla’s 5.3% notes due 2025 gained around 9/32 point in very active Thursday trading of more than $76 million, ending just below 95 bid.

On Wednesday, Palo Alto, Calif.-based Tesla’s notes had ended down 1½ points, falling below the 95 bid figure, with over $30 million traded.

The electric car manufacturer reported a $619 million quarterly loss and admitted that it will not meet its previously announced ambitious production targets for its Model 3, having to push its goal of 5,000 vehicles a week back to early next year instead of by the end of the current year.

A trader noted that Community Health Systems’ paper had “really gotten whacked” on Wednesday after the Franklin, Tenn.-based hospital operator reported a third-quarter loss of $110 million in its third quarter. The adjusted per-share loss of 77 cents was more than double the roughly 30 cents of red ink Wall Street had been looking for.

“They tanked yesterday [Wednesday] after the bell,” he said, falling by multiple points on busy volume.

On Thursday, he said, “there was some rebound” – he saw its 7 1/8% notes due 2020 closing at 81 3/8 bid – “still down versus the close, but off its lows on the day,” which he said took the notes as low as 78 bid in the morning.

Another trader saw them finishing up by ¼ point Thursday at 81 3/8 bid.

Coal operator Murray Energy’s 11¼% notes due 2021, down earlier in the week, gained some 2½ points on the session to end at 57¼ bid on volume of more than $38 million.

Frontier keeps falling

However, Stamford, Conn.-based telecommunications provider Frontier Communications’ paper continued its recent slide.

A trader saw its 11% notes due 2025 down more than 1 point, ending at 80½ bid, on volume of more than $27 million.

Its 10½% notes due 2022 lost 5/8 point to close at 83 7/8 bid, he said, with over $20 million changing hands.

The bonds had lost between 3 and 4 points on Wednesday after the beleaguered company reported that its per share net loss had ballooned out to $1.19 from just 4 cents of red ink a year ago. The loss figure was also worse than the analysts’ expectations of around a $1.15 loss. With many customers dropping their service – a phenomena that is affecting all established telephone, internet, cable and satellite companies – revenues stayed flat at around $2.25 billion.

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