Bon-Ton notes up, active on bankruptcy talk; Revlon issues busy on rating downgrade

By James McCandless

San Antonio, Feb. 2 – A slow week in the distressed debt market begat a slow end, according to traders. The most heavily traded names Friday were those driven by the week’s headlines, while others continued to occupy the volume space they had the previous day

Bon-Ton Stores, Inc. notes were active and better as reports over the last few days alleged that the company would declare bankruptcy over the weekend.

Compounding with news at the start of the week that its chief executive officer was resigning, Revlon, Inc. notes were active as the company received a rating agency downgrade.

Northern Oil and Gas, Inc. notes saw trading activity for the second day on Thursday’s news of a note exchange agreement that includes raising new equity and changes in management.

Other regular names contributing to the day’s volume were Frontier Communications Corp., Intelsat SA and Community Health Systems, Inc.

Bon-Ton busy on reports

Notes of York, Pa.-based department store company Bon-Ton Stores saw heavy trading amid reports that it will declare bankruptcy over the weekend in lieu of finding a last-minute buyer, a trader said. The company had announced on Wednesday that it would be shuttering 47 stores this year.

“It sounds like they may file over the weekend,” the trader said. “Those bonds trade in the high teens, and they’ve been drifting lower as it sounded like they were not going to come up with some sort of solution.”

The 8% notes due 2021 rose 2¾ points to close at 18 bid.

Revlon trades on new rating

New York City-based cosmetics producer Revlon’s saw an active week. On Monday, it announced the departure of CEO Fabian Garcia amid increasing losses in revenue, projecting a loss of more than $165 million for 2017. According to market sources, Moody’s Investor Service issued downgrades to the company’s corporate family rating, default rating, and speculative grade liquidity rating (see related story elsewhere in this issue).

The 5¾% issues due 2021 rose 1¾ point to close at 81½ bid. The 6¼% issues due 2024 dropped about ½ point to close at 66½ bid.

Northern Oil notes slip

A day of high volume in Minnetonka, Minn.-based independent oil and gas company Northern Oil and Gas resulted in a slight reduction of Thursday’s multipoint gains, a trader said. The company announced Thursday that it would be offering to exchange 71% of its 8% notes due 2020 for new notes due 2023 and common stock.

Those notes fell 1½ point to close the week at 90½ bid. The other 8% notes due 2020 shaved off about ½ point to close at 89½ bid.

The company announced additional plans to raise new equity and make changes in management.

Volume favorites trade

Notes in the Norwalk, Conn.-based wireline telecom Frontier Communications were mixed at the end of the week’s trading. The company’s notes have remained active since it announced last week that it had attained more debt flexibility with amendments to its credit agreements. The 7 5/8% notes due 2024 lost more than a point to close at 65¾ bid. The 10½% notes due 2022 traded up to close at about 83½ bid. The 11% notes due 2025 fell almost ½ point to end at 78 bid.

Luxembourg-based satellite communications company Intelsat traded down on the week in the usual high volume. The Intelsat Jackson SA 7¼% notes due 2020 lost about 1 point to close at 86 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 dropped to end at 41 bid while the 7¾% notes due 2021 lost yesterday’s gain to close below 45 bid.

“With stocks going down in the afternoon, it’s just going to exacerbate downward pressure with names like Intelsat,” a trader said.

Franklin, Tenn.-based hospital operator Community Health Systems also experienced high volume downward trading, a market source said, despite previous gains on the news that BlackRock had increased its ownership share in the company to 13%. The 7 1/8% notes due 2020 fell off to close just under 87 bid. The 6 7/8% notes due 2022 traded down 2½ points to close the week at 68¾ bid.

“As the stock market starts to trail off, you may start seeing distressed names get hit a little more,” a trader said.

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