Northern Oil and Gas up after beating earnings expectations; Community Health mixed on note exchange

By James McCandless

San Antonio, May 7 – Traders reported muted activity in the distressed debt market typical of the average Monday.

Northern Oil and Gas, Inc. notes traded up after the company released its Q1 numbers, beating earnings estimates.

Community Health Systems, Inc. issues were mixed as the company announced an exchange for three series of notes.

PetSmart, Inc. paper continued to climb back from a drop caused by Amazon’s entrance into the dog food delivery market.

Intelsat SA notes were mixed a week after the company posted a disappointing Q1 report. Frontier Communications Corp. issues were mixed a week after the company surprised analysts by beating Q1 estimates. Mallinckrodt plc paper received downward pressure but remained level.

Northern Oil beats estimates

Minnetonka, Minn.-based independent oil and gas producer Northern Oil and Gas notes traded up after the company posted its Q1 report early Monday, according to a market source. The company beat earnings predictions by 5 cents by posting a profit of 17 cents per share. In an earnings call, management is prioritizing the improvement of the company’s balance sheet and increasing its EBITDA (see related story elsewhere in this issue).

“This with the $70 a barrel oil made it a good day for them,” a trader said. “There’s still some question of whether it’s sustainable.”

The 8% notes due 2020 traded up 1¾ points to close at 96¾ bid.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems issues’ were mixed, traders confirmed, after the company announced that its subsidiary CHS/Community Health Systems, Inc. is offering to exchange three series of notes for up to a total $3,125,000,000 principal amount of new notes with extended maturities (see related story elsewhere in this issue).

The company told shareholders in an earnings call last week that more asset sales are forthcoming as part of its plan to decrease debt. It has already sold six hospitals in Q1.

The 7 1/8% notes due 2020 picked up ¼ point to close at 83 bid. The 6 7/8% notes due 2022 received downward pressure but remained level at around 54¾ bid.

The 7 1/8% notes gained ½ point and the 6 7/8% notes rose about 1 ¾ points on Friday.

PetSmart up

Phoenix-based pet product retailer PetSmart’s paper continued to rebound, according to traders, after shedding points last week due to Amazon.com, Inc.’s announcement that it would be offering an in-house brand of dog food for subscribers to its Prime service.

The 8 7/8% paper due 2025 gained about ¼ point to close at around 55 bid. The 5 7/8% paper due 2025 edged up ¼ point to close at 70½ bid.

The 8 7/8% paper gained ½ point, and the 5 7/8% paper rose about ¼ point on Friday.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed a week after the company released its Q1 report. The company reported a 56 cents per share loss, falling short of the 41 cents per share predicted.

The Intelsat Jackson SA 5½% notes due 2023 jumped up 1 point to close at 86 bid. The 7¼% notes due 2020 remained level at about 98½ bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications issues were mixed. Last week, the company surprised analysts by reporting a loss of 58 cents per share and $2.2 billion in revenue in Q1, exceeding analyst estimates.

The 7 5/8% notes due 2024 jumped about 2¼ points to close at 71½ bid. The 10½% notes due 2022 lost about ¼ points to close at 91 bid. The 11% notes due 2025 shaved off about ¼ point to close at around 81 bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 trade in high volume but remain level at about 72½ bid.

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