Intelsat bonds bounce on preliminary tender results; energy mixed; Claire’s seen rising, rue21 falls

By Stephanie N. Rotondo

Seattle, June 1 – It was a mixed bag for distressed debt during the first trading day of June.

For Intelsat SA, the day was a positive one. The company’s bonds – particularly those linked to its Intelsat Jackson Holdings SA unit – popped about 2 points after the company released preliminary results of its tender offer for Intelsat Jackson paper.

In addition to reporting that the offer was thus far oversubscribed, the company also extended the early deadline.

It was, however, an up-and-down day for the energy space, despite a modest gain in crude oil prices. Profit-taking might have been the culprit on the downside, though hopes of a production freeze from OPEC’s meeting on Thursday were playing a role on the upside.

Still, market chatter is that no such deal will occur.

The retail arena was also mixed for the day. Claire’s Stores Inc. paper was trending higher following a report out late Tuesday from Bloomberg indicating that the store’s private equity owner has been buying up debt.

But rue21 Inc. bonds were not faring as well. A trader said the debt was drifting lower, likely in response to the company’s recent earnings release.

Intelsat tender going well

A trader said Intelsat bonds were “a little bit better” after the company put out preliminary results of its tender offer for three series of notes linked to the Intelsat Jackson unit.

The trader saw the 7¼% notes due 2019 rising “maybe 2 points” to hit a high of 76. The 7¼% notes due 2020 were “up a good point” to 71.

Another trader pegged the 2019 paper at 76, up almost 2½ points.

The aforementioned issues are not part of the tender offer. But the 6 5/8% notes due 2022 – one issue that is part of the offer – were called a point better at 68¾ bid.

As of the original early tender deadline – May 31 – approximately $1.9 billion of notes maturing 2021 through 2023 had been validly tendered, accounting for about 48% of the outstanding principal amount.

Intelsat extended the early deadline to June 8.

On May 18, the company had extended the final deadline to June 14 from June 9. Intelsat also reduced the amount of cash holders would receive for each $1,000 of notes tendered.

The tender offer was first announced on May 12.

Intelsat is a Luxembourg-based commercial satellite services provider.

Energy debt mixed

The energy sector had no clear direction on Wednesday, as the market prepares for an upcoming OPEC meeting in Vienna on Thursday.

Though hopes of a production freeze deal kept crude prices lifted, the buzz was that no such deal would come to fruition.

A trader said Chesapeake Energy Corp.’s 3.878% notes due 2019 were steady at 74¼. However, he saw Denbury Resources Inc.’s 6 3/8% notes due 2021 coming in over a point to close at 70.

In Comstock Resources Inc. paper, the 9½% notes due 2020 were deemed over a point better at 28¼. EXCO Resources Inc.’s 7½% notes due 2018 were also better, adding “9 points in 10 days,” a trader said.

Those bonds ended at 29¼.

At another desk, Denbury’s 6 3/8% notes were seen off over 2 points at 71 bid. Chesapeake Energy’s 6 5/8% notes due 2020 were also weaker, falling over a point to 65¾ bid.

In the coal space, a trader said Peabody Energy Corp.’s 6¼% notes due 2021 were a touch softer at 14¼. But another trader said the unsecured paper “keeps moving up,” placing the notes around 14¼, as well.

Claire’s firms, rue21 falls

A trader said Claire’s Stores’ 9% notes due 2019 were higher on the day, trading between 62½ and 63.

But a second trader called the issue off 2 points from trades two weeks ago. He saw the debt going out around 62½.

Late Tuesday, Bloomberg reported that Apollo Global Management – Claire’s private equity owner – has been buying up debt that matures in 2017.

The firm purchased the retailer in a leveraged buyout in 2007 that resulted in a $2.3 billion debt burden. According to regulatory filings, the purchase of Claire’s discounted debt is the first time Apollo has forayed into its distressed portfolio since 2013. The buying up of the bonds could be the firm’s way of having more control in the event of a restructuring.

Meanwhile, rue21’s 9% senior notes due 2021 had “their first trade in a while,” a trader said, seeing the issue fall to a 40½ to 41 context from previous levels in the high-50s.

“I heard that their numbers were not good,” he said.

The Warrendale, Pa.-based company held an investor call on Thursday to discuss said results, which are not released publicly because the company is privately held.

Fannie, Freddie soften

Fannie Mae and Freddie Mac preferreds continued to be actively traded Wednesday, though the securities gave up some of the ground earned of late.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off 6 cents, or 1.28%, at $4.62. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) came in a penny to close at $4.45.

The GSEs’ preferreds have run up recently, as newly unsealed documents seem to support creditor lawsuits alleging that the government’s takeover of a majority of the agencies profits was unlawful.

Judge Margaret Sweeney of U.S. Court of Federal Claims has asserted that she wants to review all documents the government has been trying to keep sealed in regards to the Treasury’s “net worth sweep” of the agencies’ profits. In recent weeks, Sweeney has unsealed a number of documents that appear to show that the Treasury and the White House worked together more than previously reported in rationalizing the government’s takeover of a majority of Fannie and Freddie’s profits.

© 2015 Prospect News.
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