iHeart stays active ahead of CDS auction; Peabody up on Chapter 11 exit; GenOn sees mixed movement

By Colin Hanner

Chicago, Jan. 17 – Activity resumed in the distressed arena on Tuesday following the Martin Luther King Jr. holiday, with several notable distressed names trading on sector- and company-specific news.

Among those, iHeartCommunications, Inc.’s distressed securities were the “top dog” in the distressed market, a trader said, though one of its most-active securities was flat on the session.

On Tuesday, iHeartCommunications announced an auction to settle the credit derivatives trades for its credit default swaps will come at the beginning of next month.

On top of news that the company will look to exit Chapter 11 bankruptcy, Peabody Energy Corp. announced it is seeking approval of a sale to a stalking horse bidder, though speculation driven by a Barron’s article that reported equity shareholders are trying to become part of the reorganization plan drove the company’s stock prices down.

In energy and production, GenOn Energy, Inc. continued to move, though it saw mixed fluctuations after it was one of Friday’s most active securities.

Hospital groups Quorum Health Corp. and Community Health Systems, Inc. were also mixed.

iHeart active, though unchanged

On Tuesday, the media and entertainment company, iHeartCommunications, continued to be one of the most hotly traded names in the distressed arena, fueled by speculation on the upcoming CDS auction that traders said have kept the levels of notes nearly unmoved.

The 14% notes due 2021 were unchanged on the session, a trader said, finishing with the 37 handle it carried over from Friday.

Peabody up, though some concern

As reported Friday by Prospect News, Peabody Energy announced that it had received an exit facility commitment letter from Goldman Sachs, JPMorgan Chase, Credit Suisse and others that will effectively lift the St. Louis-based coal company out of a Chapter 11 bankruptcy, according to an 8-K filed with the Securities and Exchange Commission.

On the same day, Peabody also announced it is requesting court approval of a $10 million sale of interest in Dominion Terminal Associates – which it owns through its subsidiaries – to stalking horse bidder Newport News Terminal Associates, LLC.

The true gains from the catalysts seen on Tuesday were in the 6½% notes due 2020, which were up 2¼ points to 51¼, a market source said.

Yet, the road to reorganization received some limelight this weekend from an article in Barron’s, which laid out how equity shareholders will try to be part of the reorganization process based on the valuation of the company as it relates to the current state of the coal market.

Peabody’s equity shares were down 90 cents, or 18.29%, to $4.02 on the day.

E&P sees mixed movement

Carrying over its momentum from Friday, GenOn Energy continued to trade on Tuesday’s session, though it met mixed movement in two of its securities.

The 9 7/8% notes due 2020 were up 1/8 point to 74¾, while the 9½% notes due 2018 were down 1 3/8 points to 76½, a trader said.

Pacific Drilling Co.’s 7¼% notes due 2017 were up “almost ½ point” to 47, a trader said.

And a market source said California Resources Corp.’s 8% notes due 2022 were up ½ point to 90¼.

Hospitals up and down

As decisions about the Affordable Care Act are brought to the chopping block in a Republican-controlled Congress – and soon to be White House – hospital groups will continue to come under scrutiny for their sustainability under the alternatives Republicans have said will replace the government-sponsored health insurance.

On Tuesday, a report from the Congressional Budget Office concluded that 18 million people would lose health insurance without portions of the Affordable Care Act, leaving those who take care of insured patients to wonder what a Republican-backed health insurance program would look like.

Movement was mixed for several hospital groups on the session, including Quorum Health’s 11 5/8% notes due 2023, which were “rebounding” ¼ point to 90, a trader said.

On the flip side, Community Health’s 6 7/8% notes due 2022 were down 1¼ points to 74½, combining for 2-point loss for the past two sessions.

Pharma movers

Canadian pharmaceutical company Concordia International Corp.’s 7% notes due 2023 were up ¼ point to 37¾, a trader said.

Seeing a swing in the opposite direction, Valeant Pharmaceuticals International, Inc.’s 6 1/8% notes due 2025 – the most active out of Valeant’s securities last week amid asset sales – were down ½ point to 74¾, a trader said.

A one-off market roundup

Columbus, Ohio-based Hexion Inc.’s 9% notes due 2019 were unchanged at 82½, a market source said.

Technology company Avaya Inc. saw two of its distressed securities traded, the 9% notes due 2019 – unchanged at 82½ – and the 7% notes due 2019, which were down 1 point to 81¼, a trader said.

Shipping and logistics company Navios Maritime Holdings Inc.’s 7 3/8% notes due 2022 were unchanged at 61½.

Intelsat Luxembourg SA’s 8 1/8% notes due 2023 were down 1½ points to 31 on one trade, a market source said.

And distressed retailer Neiman Marcus Group, Inc.’s 8% notes due 2021 were up ¼ point to 68¼.

© 2015 Prospect News.
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