Distressed debt action remains muted; Intelsat paper rebounds; Chesapeake bonds lose ground as oil slides

By Stephanie N. Rotondo

Seattle, July 19 – Intelsat SA bonds remained active in an otherwise subdued distressed market, a trader reported Tuesday.

“This market just doesn’t exist,” he said. While summer vacations were likely playing a role in the muted activity, he also opined that volatility was lacking.

“The market seems like it’s one-way,” he said, adding that there was “nothing particularly shaking the market up.”

As for Intelsat, its 8% notes due 2024 “rallied,” according to a trader.

He said the debt ticked up “a couple points” to 93½ bid, 94 offered.

Even bonds linked to the Intelsat Jackson Holdings SA unit were slightly better, as the 7¼% notes due 2019 inched up a point to 71.

However, the trader noted that “short luxco” paper, such as the 6¾% notes due 2018, traded down “a few points” to 53½.

At another desk, the Intelsat Jackson 6 5/8% notes due 22 were deemed a point higher at 67 bid.

On Friday, the company announced the expiration of a tender offer held at the Jackson unit, under which it exchanged $673.45 million of the 6 5/8% notes for cash – $687.50 per each $1,000 of notes, to be exact.

The Luxembourg-based commercial satellite services provider’s second-quarter earnings are also on the horizon, scheduled for July 27. For the first quarter, the company saw its net profit narrow to $15.3 million from $54.7 million.

However, Intelsat maintained its 2016 guidance at that point.

Chesapeake dips with oil

Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were also trading on the busier side on Tuesday, according to a market source.

The source placed the debt at 89 bid, 89¼ offered, down “a little bit” for the day.

Another source said the 6 5/8% notes due 2020 slipped nearly a point to 74 bid.

The weakness followed along with the declines in domestic crude oil, which was weighed on by a rallying dollar and ongoing concerns about a supply glut.

West Texas Intermediate crude dropped 1.39% to $4.61 a barrel.

The U.S. Energy Information Administration is set to release its weekly inventory report on Wednesday. The market is expecting the ninth-straight drawdown of supplies, but given the global glut, it might not be enough to indicate the rebalancing the market is hoping for.

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