Community Health bonds still busy, weak; Concordia rally loses steam; coal names trade mostly better

By Stephanie N. Rotondo

Seattle, Sept. 20 – The distressed debt market had a firm tone on Tuesday, although there was no fresh news to spur the gains.

However, the broader markets were also trending positive, as investors wait to see what the Federal Reserve will say at its latest policy meeting.

That announcement is slated to come Wednesday afternoon.

The healthcare sector continued to be in focus in Tuesday trading. Community Health Systems Inc. – which was active on Monday on word the hospital operator was exploring its options – again experienced “tons of trades,” according to a trader.

The trader said at least $70 million of the 6 7/8% notes due 2022 traded, falling over half a point to 84 3/8.

However, he said the 8% notes due 2019 were steady at 96½.

Also in the healthcare space, Canadian drugmaker Concordia International Corp.’s bonds turned weaker Tuesday after rebounding on Monday.

The paper had taken a considerable beating on Friday when the United Kingdom said it was considering legislation that would bar exorbitant price increases on certain drugs.

The 7% notes due 2023 slipped almost 2 points to 65½, a trader said. The 9½% notes due 2022 dipped only a quarter-point to 71.

Coal producers also continued to see some action, though perhaps not as much as its healthcare peers.

Arch Coal Inc. bonds had a “monster move,” a trader said, at least on a percentage basis.

He called the 7% notes due 2019 up almost a point at 5, while the 7¼% notes due 2020 ticked up a shade to 5 1/8.

Peabody Energy Corp.’s 6% notes due 2018 were meantime unchanged at 24½, the trader said.

And, Murray Energy Corp.’s 11¼% notes due 2021 moved up 1¼ points to 43½, as Moody’s Investors Service upped the company’s corporate credit rating to B- from CCC+.

The rating agency cited expectations of operational cost savings and lower leverage.

Fannie-ing the flames

Fannie Mae preferreds jumped in Tuesday trading, though a market source opined that the gains were purely due to speculation.

The 6.75% series Q noncumulative preferreds (OTCBB: FNMAI) rose 41 cents, or 15.19%, to $3.11, while the 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) improved 44 cents, or 13.84%, to $3.62.

“Because of the high-risk nature of those securities, they respond a lot” to speculation, the source said.

He did note that there were a couple of Bloomberg Intelligence pieces that came out early in the day, one that was essentially an overview of the GSE’s situation and one that speculated that Jeb Hensarling (R-TX), the chair of the House Financial Services Committee, could bring up GSE reform again in 2017.

But the source commented that in addition to being speculation, it is actually Hensarling’s job to bring that topic back to the table.

“So they just stirred [things] up,” he said of the reports.

© 2015 Prospect News.
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