Intelsat profit narrows, but better than expected; Bombardier flies on new orders; oil names get boost

By Stephanie N. Rotondo

Seattle, April 28 – Another round of fresh earnings was helping to push up distressed credits on Thursday.

Intelsat SA announced its first-quarter results, showing a narrower profit year over year. However, the company reaffirmed its annual financial guidance.

Bombardier Inc. also came out with earnings on Thursday, but that wasn’t the company’s biggest news of the day. The company announced that it had received an order from Delta Air Lines for 75 of its CS100 planes – the first major U.S. carrier to order the troubled CSeries line.

Away from earnings, continued gains in domestic crude oil prices resulted in sizeable gains for oil producers.

A trader said Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were “very active,” rising over a point to 69 3/8. The 5¾% notes due 2023 meantime jumped 5 points to 55.

California Resources Corp.’s 8% second-lien notes due 2022 were also better, gaining over 2 points to close at 69.

In Denbury Resources Inc. paper, the 4 5/8% notes due 2023 were seen up 6 points at 59.

Legacy Reserves LP was another gainer. Both the 6 5/8% notes due 2021 and 8% notes due 2020 ticked up 2 to 3 points to close at 32 3/8.

Intelsat busy, better

Intelsat reported a narrower profit for the period ending March 31, but affirmed its 2016 guidance.

A trader said the company’s bonds were mostly higher in response.

The 6 5/8% notes due 2022 experienced “very heavy volume,” adding nearly 5 points to close at 63½. The 7¾% notes due 2021 improved 5 points to 32¾, while the 7¼% notes due 2019 pushed up 2½ points to 81. The 7½% notes due 2021 meantime increased 1½ points to 71¾.

However, the 5½% notes due 2023 fell over a point to 63, as the 8% notes due 2024 – a $1.25 billion issue that priced March 29 – dipped half a point to 103½.

Another trader said the bonds firmed on “better-than-expected results.” He saw the “luxco” issues trading “up a bunch, 5 points roughly” to 32 from 27. The 6 5/8% notes were deemed 4 to 5 points higher as well, trading in a 63 to 64 zip code.

Net income for the first quarter was $15.3 million, or 13 cents per share. That compared to income of $54.7 million, or 47 cents per share, the year before.

Adjusted net income came to 31 cents per share, versus 69 cents per share the previous year.

Analysts polled by Thomson Reuters had forecast EPS of 21 cents per share.

EBITDA declined to $407.5 million from $460.5 million. Adjusted EBITDA was $417.7 million, or 76% of revenue. That compared to $470.5 million, or 78% of revenue, in the first quarter of 2015.

Total revenue was $552.6 million, above analysts’ estimates of $543.5 million.

Intelsat is a Luxembourg-based satellite services provider.

Bombardier takes flight

Bombardier’s earnings announcement was overshadowed by news of a large new order from Delta Air Lines.

As a result of the news, the bonds were “all up pretty big,” a trader said.

He saw the 6% notes due 2022 adding almost 2½ points to close at 88 3/8. The 6 1/8% notes due 2023 pushed up 4 points to 88¼, as the 7¼% notes due 2025 ticked up 5 points to 91¼.

The 7½% notes due 2018 gained over a point to end at 101 7/8.

As for the first quarter results, the Canadian aircraft and train manufacturer posted an adjusted-per share loss of 3 cents – bigger than the loss of 1 cents per share that analysts polled by Thomson Reuters had predicted.

Revenue was down 11% at $3.91 billion.

But in a boon to the company’s struggling CSeries jetliner, Bombardier said it secured an order for 75 of its CS100 planes from Delta, a deal valued at $5.6 billion, based on list price.

However, chatter is that Bombardier might have offered discounts of up to 75% to secure the deal, especially as the company said it would book a $500 million “onerous contract” charge in the second quarter for deals done with Delta and Air Canada.

The terms of the Delta deal allow for the addition of 50 more planes to the order, as well as an option to convert a portion of its order to the larger CS300 aircraft.

The deal also pushed Bombardier over its 300-orders target ahead of the commercial launch this summer.

While the deal was largely viewed as a positive, the company is not out of the woods yet.

“While this is a step in the right direction, the company is still burning through cash, and the timing as to when the CSeries program turns profitable and becomes free cash flow positive” remains some time away, Gimme Credit LLC analyst Evan Mann wrote in an afternoon comment.

Paragon to miss coupon

Paragon Shipping Inc.’s 8.375% $25-par senior notes due 2021 (Nasdaq: PRGNL) improved in above-average trading on Thursday.

The gains came as the company said it would miss its May 15 coupon payment, due to a lack of liquidity.

The notes increased $1.64, or 37.58%, to $6.00.

The company also missed a Feb. 15 coupon.

In early February, Paragon offered to tender for all of the $25 million issue. By the tender’s expiration, only 18.8% of the outstanding amount had been tendered and swapped for stock.

Paragon Shipping is an Athens, Greece-based shipping company specializing in the transportation of drybulk cargoes.

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