Energy rise continues; Altice dives, Revlon slides; Real Alloy gyrates after Chapter 11

By Paul Deckelman

New York, Nov. 17 – Traders in distressed debt and the bonds of otherwise underperforming companies and sectors saw things trading with a generally firmer tone on Friday, helped by a second day of relative strength in the broader high-yield bond market.

One sector seen doing well was energy, led by credits such as California Resources Corp. and EP Energy Corp., which continued to rise against a backdrop of big gains Friday in world crude oil prices.

On the downside, international cable and telecommunications operator Altice SA’s various bond issues turned lower, giving up gains notched earlier in the week.

Other downsiders included Revlon Inc., Frontier Communications Corp. and Community Health Systems, Inc.

Real Alloy Holding Inc.’s bonds were bouncing around following the Chapter 11 filings by the aluminum recycling company’s U.S. operations and its holding company corporate parent, Real Industry, Inc.

Crude gain lifts energy names

Traders saw continued firmness in the energy sector, noting that for the first time in several days crude oil prices were sharply firmer on increased geopolitical tensions in the Middle East

West Texas Intermediate jumped by $1.41 per barrel on the New York Mercantile Exchange, settling at $56.55 after three straight losses.

And North Sea Brent crude broke out of a five-session slump, rising by $1.36 per barrel in London futures trading to end at $62.72.

That was favorable news, a trader said, for names such as California Resources, whose 8% notes due 2022 improved by 5/8 point to end at 71 15/16 bid, with over $32 million of the Los Angeles-based exploration and production company’s benchmark issue traded.

A trader saw Houston-based sector peer EP Energy’s 9 3/8% notes due 2020 climb by more than 1½ points on the day, ending at just over 78 bid, with over $19 million traded.

Altice paper pummeled

On the downside, traders saw Netherlands-based telecommunications company and cable operator Altice’s bonds and those of its various subsidiaries uniformly lower.

That paper had firmed earlier in the week after company executives had assured investors that they were getting serious about trying to reduce Altice’s estimated €50 billion equivalent ($59 billion equivalent) net debt load, declaring that the company would shelve its heretofore aggressive acquisition strategy to concentrate on deleveraging.

But by Friday, traders said that the investors were again skeptical

That pushed Altice’s bonds lower in active dealings, including its 6 5/8% notes due 2023, seen off ¼ point at 103 5/8 bid, with over $20 million traded.

Its 7 5/8% notes due 2025 swooned by 1¾ points, ending at 97½ bid on over $18 million of volume.

Bonds of Altice’s French subsidiary SFR Group SA were lower as well, with its 7 3/8% notes due 2026 plunging more than 2 points on the day to 102½ bid, with over $25 million changing hands.

Underperformers lose ground

Also on the downside were such familiar names as Frontier Communications, Revlon and Community Health Systems.

Stamford, Conn.-based telecom provider Frontier’s 11% notes due 2025 lost ¾ point on the day to close at 77¼ bid, with over $16 million having traded, while its 10½% notes due 2022 were down more than ½ point, closing just under 79½ bid, with over $11 million traded.

New York-based cosmetics company Revlon’s 6¼% notes due 2024 plunged a full 5 points to 55¼ bid, with around $12 million traded.

A market source said he was unaware of any fresh news that might explain that substantial drop.

Franklin, Tenn.-based hospital operator Community Health Systems’ 6 7/8% notes due 2022 lost 2¼ points on the day, ending at 62½ bid, with over $23 million having traded, while its 8% paper due 2019 did even worse, nosediving by 3 points to 88 5/8 bid on more than $18 million of volume..

Real Alloy roiled

A trader said that Real Alloy Holding’s 10% notes due 2019 “were all over the place” after the New York-based metals recycling company’s U.S. units and its holding company corporate parent, Real Industry, filed for Chapter 11 protection.

He said that the notes “were trading with a 50ish handle “early in the session on the bankruptcy news, but then moved back up into the 60s by the end of the day, closing at 65 bid, with over $13 million having traded.

The notes were trading flat, or without their accrued interest, following the bankruptcy filing.

He said that as recently as late October “that bond was trading in the lower 90s” but then had dropped to around 77¾ by the start of this week.

© 2015 Prospect News.
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