Intelsat trades actively, lower post-tender news; Linn Energy continues to tick up; retail space declines

By Stephanie N. Rotondo

Seattle, May 13 – Intelsat SA and Linn Energy LLC continued to dominate the distressed debt market on Friday.

For its part, Intelsat gave up the gains seen Thursday after the company announced it would exchange three series of notes at its Intelsat Jackson Holdings SA unit for up to $625 million in cash.

The exchange is being done at a discount to par.

Linn Energy, however, continued to push higher following word of the oil and gas producer’s bankruptcy filing. A trader noted that, given the filing, the bonds are trading flat, or without accrued interest.

Elsewhere in the distressed – or nearly distressed – space, retailers were taking a hit despite a Commerce Department report that showed a gain in retail sales in April.

The sector has been dragging of late, however, as retailers like Macy’s have reported weak quarterly results. JCPenney Co. Inc. followed that trend in its own report out Friday.

Revenue declined 1.6% to $2.81 billion, as sales dipped 0.4% – coming in below the company’s own expectations.

The good news was that cost-cutting efforts did help to narrow the quarterly loss to $68 million from $150 million.

One trader said the numbers were “disappointing,” seeing the 6 3/8% notes due 2036 slipping to 73½.

Neiman Marcus Group Inc. debt was also weaker. A trader said the 8¾% notes due 2021 weakened 2½ points to 70½.

Intelsat paper wanes

Intelsat bonds were called “very active,” but weaker in the wake of Thursday’s news of a tender offer.

A trader said the Intelsat Jackson-linked 7¼% notes due 2019 declined over 2½ points to 77¼, while the 7¼% notes due 2020 dropped 4 points to 70½.

The 5½% notes due 2023 meantime fell 2½ points to 65½.

“They definitely traded off pretty good,” another trader said. “These bonds were down 5 points before rebounding some.”

He saw the 2020 maturity hitting a low of 67 before it rallied back to around 70.

“But it was still down on the day,” he said.

He also pegged the 5½% notes at 65, up from the intraday lows in a 63 to 64 range, but down from 68 as of Thursday’s close.

Under the terms of the tender, Intelsat Jackson will exchange up to $815.25 million of the 6 5/8% notes for $740 per each $1,000 of notes; up to $2 billion of the 5½% notes at $730 per each $1,000; and up to $1.15 billion of the 7½% notes due 2021 for $775 per each $1,000.

There is a $20 early tender premium for each $1,000 tendered by 5 p.m. ET on May 25.

The tender will expire at 11:59 p.m. ET on June 9.

News of the tender came after the Jackson unit said in a regulatory filing that it had repurchased approximately $460 million of its 6 5/8% notes since April 28. The notes were acquired via the open market as well as from privately negotiated purchases, all at a discount to par.

Intelsat is a Luxembourg-based commercial satellite services provider.

Linn still firm

Linn Energy bonds were “pushing up still,” a trader said, after the company announced late Wednesday that it had filed for Chapter 11 protections.

He saw the 7¾% notes due 2021 at 13½ by the bell.

Another trader placed that issue at 13¼. He also saw the 8 5/8% notes due 2020 trading up to 13 3/8.

“Both saw significant volume,” the trader said.

In its announcement, Linn said that its Berry Petroleum unit also filed for Chapter 11.

Under a plan inked with creditors, Linn will spin-off the Berry unit, which the company acquired in 2013. The deal also includes a new $2.2 billion reserve-based term loan and a term loan credit facility.

Linn also said that it had enough cash on hand to avoid securing a debtor-in-possession facility.

However, junior creditors have not signed on to the deal and filed their own plan that would give them control of the company.

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