iHeart bonds rise post-creditor agreement; Intelsat misses benefit of day’s rally; commodities gain

By Stephanie N. Rotondo

Seattle, March 1 – Distressed bonds were on the rise Tuesday, following the broader markets upward.

“A lot of stuff rallied today,” a trader said.

“ETFs were going insane, just buying everything,” another trader said.

Overall, the markets got a boost by fresh U.S. factory and construction data that indicated the economy was recovering. Additionally, oil prices popped as Russian president Vladimir Putin said a deal to cap oil production within Russia was close.

Domestic crude gained 1.75% to close at $34.34 a barrel. Commodities in general were higher, helping to boost that struggling area.

Of the day’s dealings, iHeartMedia Inc. debt moved higher following news the company had reached a deal with creditors to stave off a potential default.

But while there was a definite firm tone to the market, Intelsat SA remained weak. The bonds have been active of late and trending mostly lower – a trend that was exacerbated Monday when the company said it was seeking an amendment of its credit facility.

iHeart bonds pop

iHeartMedia paper headed upward after Bloomberg reported the San Antonio-based multimedia company had reached a deal with lenders over a potential default.

A trader saw the 9% notes due 2021 gaining nearly 3 points to close at 70½, as the 10% notes due 2018 jumped 5 points to 37½.

At another desk, a trader saw the 10% notes trading “as high as 38,” up 5 to 6 points. The 14% notes due 2021 meantime improved “a bunch,” closing at 27½.

The trader also saw the 9% notes moving up 2 to 3 points to 70½. The 9% notes due 2019 were “rallying as well, but not nearly as much,” the trader said.

iHeart’s lenders have agreed to hold off on filing a default notice that alleges the company breached its debt agreements when it transferred assets to its Broader Media LLC subsidiary. In return, iHeart has agreed to hold off on transferring any other assets. The parties now have until Wednesday – unless the timeline is extended – to come up with a plan to deal with the over $12 billion in debt maturing in the next five years.

That includes $193 million of notes that mature this year.

Intelsat remains depressed

Intelsat bonds failed to take advantage of the day’s rally, as the debt continued to dive.

“They were one of the only things bucking the trend,” a trader said.

He said the 5½% notes due 2023 weakened nearly 2 points to 61¾, while the 7¼% notes due 2020 dropped 1½ points to 64.

Another trader said the name was “weaker, traded down some.” He saw the 5½% notes trading as low as 59, though it went out in a 60 to 61 context, off 3 to 4 points on the day.

Under its amendment request, Intelsat is seeking permission to permit second-lien pledges by Intelsat (Luxembourg) SA over the capital stock of Intelsat Jackson and technical changes confirming its existing ability to refinance term loans with other first-lien debt.

The proposed amendment also outlines that if Intelsat Jackson raises at least $450 million of gross cash proceeds of first-lien debt, the revolving credit commitment will be reduced to $350 million.

Intelsat is a Luxembourg-based provider of satellite services.

Commodities ride the wave

The commodity space gained ground Tuesday as prices for oil and metals surged.

In the oil and gas sector, Continental Resources Inc. bonds were “up 6 points,” a trader said.

He deemed the 4.9% notes due 2044 almost 7 points higher at 68 1/8. The 5% notes due 2022 gained 6½ points, ending at 80¼. And, the 4½% notes due 2023 rose 5½ points to 78.

Whiting Petroleum Corp.’s 5% notes due 2019 were also better, finishing up 3½ points at 54.

In California Resources Corp. paper, a trader said the 5½% notes due 2021 jumped up almost 3 points to 16¾, as the 8% second-lien notes due 2022 popped 4½ points to end at 32½.

“They rallied a good bit,” a second trader said. He saw the 8% notes closing in the mid-30s, trading as high as 34.

“That’s a real nice move for those, like 7 to 8 points,” he said.

In the metals arena, Freeport-McMoRan Inc.’s 6 7/8% notes due 2023 increased over 5 points to 77¼.

Among steel producers, AK Steel Holdings Corp.’s 7 5/8% notes due 2021 ticked up nearly 6 points to 56½, as United States Steel Corp.’s 7% notes due 2018 gained 3 points, ending at 82.

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