Frontier active again as new notes price; J.C. Penney sees more activity after pricing new issue

By James McCandless

San Antonio, March 8 – More of the same low levels of activity were reported by traders in the distressed debt market Thursday, with new pricings and recent news driving some favorites.

Frontier Communications Corp. was ever the volume favorite as it priced new notes. Recent positive news has had its tranches trending upward.

J.C. Penney Co., Inc. saw another rise in trading as the company announced its own new pricing Thursday.

Cobalt International Energy, Inc. paper took a less steep fall after Wednesday’s crash. The company is coming off of an asset auction where bids were not as high as anticipated.

Intelsat SA remained at the top of the distressed telecom space. Recent negative news concerning potential hospital closures kept Community Health Systems, Inc. active in healthcare. A mixed day in oil futures spurred activity in Ensco plc and Northern Oil and Gas, Inc.

Frontier notes price

Thursday was another active day for Norwalk, Conn.-based wireline telecom name Frontier Communications, traders said, as the company priced a $1.6 billion issue of eight-year second-lien secured notes at par with an 8½% yield. The move comes after a succession of positive news, including positive ratings and a stable outlook from Moody’s Investors Service and the cancellation of its quarterly dividend to focus more on paying down debt.

“They are starting to look more stable,” a trader said.

The 7 5/8% notes picked up about 1½ points to close at 62¾ bid. The 10½% notes due 2022 rose about 1 point to close at about 87¾ bid. The 11% notes due 2025 traded up about 2 points to close at 82 bid.

J. C. Penney also prices notes

Plano, Texas-based department store name J. C. Penney saw its issues active, a market source confirmed, as it priced a $400 million issue of seven-year senior secured second priority notes at 8 5/8% yield. Recently, the name has been active after issuing a disappointing Q4 report and announcing more than 300 layoffs at all levels of the company.

The 7.4% bonds due 2037 rose 2 points to close at 74½ bid.

Cobalt trades again

Houston-based oil exploration company Cobalt issues were trading again after Wednesday’s asset auction, which traders described as disappointing for the company. Up for bid for the bankrupt name were top assets in the company that received $578 million in offers.

“It was a bad day for them,” a trader said. “They might just have to bite the bullet and try to work their way out from there.”

The 7¾% paper due 2023, which cratered by more than 16 points Wednesday, lost ¼ point to close at 79¾ bid.

Volume favorites active

Another telecom favorite has been Luxembourg-based satellite communications company Intelsat, which received a bump in activity recently due to positive comments about how satellite firms could benefit from potential changes to the country’s 5G network.

While in high volume, the Intelsat Jackson SA 5½% notes due 2023 held firm at 83 bid. The 7¼% notes due 2020 shaved off ¼ point to close at 94 bid.

Franklin, Tenn.-based hospital operator Community Health Systems has taken up much of the volume in the distressed healthcare sector of late. The company has bore the brunt of bad news in a Q4 report, predictions of further hospital closures, and ratings downgrades.

The 7 1/8% issues due 2020 rose about ¾ point to close above 82¼ bid. The 6 7/8% issues due 2022 dropped 2¼ points to close at 60¼ bid.

Elsewhere in energy, a mixed day for oil futures led to more trading in distressed oil names.

Britain-based oil driller Ensco’s 5¾% bonds due 2044 lost about 3 points to close at about 67 bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% paper due 2020 rose about ¾ point to close at about 92¼ bid.

This week has been kind of a wash, but it hasn’t been as bad as some people expected,” a trader said. “I don’t think we’ll feel the effects of these new tariffs, at least not as quickly as equity markets. It has a lot of people worried though, so they might decide to keep their money close.”

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