iHeartMedia bonds better as default hearing starts; Intelsat busy; Southwestern Energy trades off

By Stephanie N. Rotondo

Seattle, April 4 – With the second quarter underway, distressed debt was mostly higher in Monday trading.

Still, one trader noted that activity among distressed credits was thin. Another remarked that attention continued to be focused on new high-yield issues instead.

Of the day’s dealings, iHeartMedia Inc. traded firm as hearings regarding a transfer of assets from one subsidiary to another began in Texas. Creditors had brought the lawsuit against the company following the transfer of over $500 million in stock to a newly formed subsidiary, alleging that the transfer amounted to a default.

“Some of the trading might be posturing around what people think will come out of that,” a trader said.

Meanwhile, Intelsat SA paper continued to be “fairly active,” a trader said. Bonds traded up during the session, though without any news as a catalyst.

In the commodity arena, domestic crude oil declined on Monday, as hopes of a production freeze dimmed. That, in turn, pressured already struggling energy names.

For instance, Southwestern Energy Co.’s 4.95% notes due 2025 were active, with “over 20 trades,” according to a trader. The notes ended off over 2 points at 67¼.

The trader also saw the 4.05% notes due 2020 dropping nearly 1½ points to 71 1/8.

The fall in oil prices has made for harsh conditions for exploration and development companies, resulting in lower debt prices as investors worry about the bottom line. That was further evidenced by the latest round of missed coupon payments. Both Ultra Petroleum Corp. and Midstates Petroleum Corp. deferred interest payments due April 1. In downgrades of both entities, Standard & Poor’s noted that neither company is expected to make the payment within the 30-day grace period.

Also in commodities, steel names continued to gain ground as prices for the metal improve.

AK Steel Holdings Corp.’s 7 5/8% notes due 2020 “continue to creep up,” a trader said, placing the issue in a 65½ to 66 context.

“That’s up another point and change,” he said.

iHeart up as hearing begins

A hearing to decide whether San Antonio-based iHeartMedia wrongfully transferred assets to a subsidiary began in Texas on Monday.

The creditor group that brought that lawsuit included Franklin Mutual, Franklin Advisors, Canyon Capital and D.E. Shaw.

The bonds were pushing up as court proceedings began, leading one trader to speculate that the moves were due to posturing ahead of a decision.

That trader saw the 9% notes due 2019 trading up to 76¾ bid, 77 offered.

Another trader said the 11¼% notes due 2021 rose 1½ points on “almost a dozen trades” to 71½.

On Dec. 3, iHeart moved $516 million of equity in Clear Channel Outdoor Holdings to Broader Media LLC, a newly formed subsidiary. In early March, creditors issued notices of default to the company, alleging that the transfer resulted in a default under the indentures.

iHeart, however, claimed that the transfer was perfectly above-board. In an effort to squash the default talk and come to terms on dealing with the company’s $20 billion in debt, talks with creditors began.

On Monday, the multimedia company said those talks were terminated. Without any agreement from the discussions, the hearing got underway.

Intelsat mixed

Intelsat continued to be actively traded on Monday, though without any fresh news to cause the activity.

A trader said the 7¼% notes due 2020 ticked up a touch to 65½, as the 5 5/8% notes due 2022 fell almost a point to 55 1/8.

Another trader, however, deemed the debt better, seeing the 7¼% notes in a 65½ to 65¾ zip code.

Intelsat is a Luxembourg-based satellite services provider.

© 2015 Prospect News.
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