Community Health sees mixed movement after $425 million sale; oil back-and-forth; coal down, again

By Colin Hanner

Chicago, Nov. 18 – Coal, and especially oil, spaces experienced some fluctuation on Friday, and a small asset sale for a regularly-traded distressed name capped off the week in the distressed high-yield arena.

“Community Health Systems [Inc.] was an up-and-down roller coaster,” said a trader, after the company announced an asset sale of West Coast facilities for over $400 million. Its bonds fluctuated throughout the day, and several traded lower than Thursday’s levels.

On Thursday, coal plummeted to lows not seen in months, and producers Peabody Energy Corp. and Murray Energy Corp. continued to reflect the sector’s sentiment into Friday.

Oil went through up-and-down motions throughout the day, finally finishing up on the day after news surfaced that Organization of Petroleum Exporting Countries member Algeria announced its confidence in a supply cut deal at the end of the month after meeting with Russia.

Stone Energy Corp. and GenOn Energy Inc. echoed the morning and afternoon trends with movement in both directions.

French-based geophysical service company CGG SA saw an increase on the day, perhaps answering the uptick in U.S. oil rigs added in the week.

Intelsat SA quieted after seeing daily jumps for the past week.

Community Health asset sale

Late Thursday, Community Health announced that it signed a definitive agreement to sell Rockwood Health System and its subsidiary assets – including two hospitals and one clinic in Washington – to MultiCare Health System for $425 million, subject to adjustments, a release said.

The transaction, which will close in the first quarter of 2017, was discussed in the company’s third-quarter conference call as one of the seven transactions the company could pursue.

Proceeds of the transaction will go toward paying down the company’s debt.

“The bonds were taking off [during the morning session],” a trader said, seeing some definitive fluctuation that pared some of the bonds’ gains from Thursday.

The 6 7/8% notes due 2022 were the most actively traded, a trader said, and were down ¼ point to 69¾.

The most volatile of the bonds were the 7 1/8% notes due 2020, which shot up to 76 at opening and finished at 72¾, down 1/8 to ¼ point from Thursday.

The 10% notes due 2022 were down 2¾ points to 80¾.

Seeing an uptick among decliners were the 8% notes due 2019, which were up 2¼ points to 81¾, and the 5 1/8% notes due 2021, which were up 1 point to 92¼, according to a market source.

Up-and-down oil

The dollar finished at one of the highest levels of the year, and oil declined in response.

That was compounded by release of the weekly oil rig count, which increased by 19 to 471 this, according to data from Baker Hughes Inc.

Yet, oil futures rebounded in the early afternoon after Algeria expressed confidence in a supply cut deal that is to take place in less than two weeks among OPEC and non-OPEC nations.

At the time of the bond market closing, West Texas Intermediate crude was up 12 cents, or 0.26%, to $45.54. It was as low as $44.89 on Friday morning.

Brent crude finished up 28 cents, or 0.60%, to $46.77 at the same time, and was as low as $45.97 in the morning.

In distressed-land, Stone Energy’s 7½% notes due 2022 were down 1 point to 58. A market source said those same notes were up ½ point to the same handle.

Seeing a mixture of movement was GenOn Energy, whose 7 7/8% notes due 2017 were down 1 point to 74½ on a half-dozen trades, a trader said.

A market source said the company’s 9½% notes due 2018 were up ½ point.

CGG SA’s 6½% notes due 2021 were up 1¼ points to 44½.

Rounding out oil was Denbury Resources Corp., whose 6 3/8% notes due 2021 were up ¾ point to 81¾, a market source said, and EP Energy Corp., whose 6 3/8% notes due 2023 were up ¾ point to 67.

Cold coal

After China announced it would extend coal mining operations to 330 days per year from 276 days, along with several firms querying the big rise in coal prices – including BHP Billion Ltd., the world’s largest miner – coal companies dipped on Thursday, which followed into Friday’s trading.

A market source said that Peabody Energy’s 6½% notes due 2020 were down ½ point to 56½, and the 10% notes due 2022 were down 2¾ points 80¾.

Murray Energy’s 11¼% notes due 2021 were down 1½ points to 73½.

And Cleveland-based Cliffs Natural Resources Inc. was down almost 1 point to 77, a market source said.

Round up

Intelsat’s Luxembourg-linked 8 1/8% notes due 2023 were unchanged at 36, a trader said, while the 7¾% notes due 2021 saw a ½-point decrease to 36¼.

Canada-based Valeant Pharmaceuticals International, Inc. – which has been surrounded by a flurry of news recently, including charges brought against two former executives this week – saw no movement in its 7½% notes due 2023, which remained at 77¼.

On Friday, Moody’s Investors Service downgraded Jack Cooper Enterprises, Inc.’s $375 million 9½% senior secured notes due 2020 to Caa3 from Caa1, causing the notes to drop 3/8 point to 41¾, a market source said.

In low-activity trading, Gymboree Corp. had one trade in its 9 1/8% notes due 2018, which were down 3 points to 5, a trader said.

Fertilizer manufacturer and distributor CF Industries Holdings, Inc. saw a “half-dozen trades” in its 4.95% notes due 2043, which were down ½ point to 79½.

iHeartMedia Inc.’s 14% notes due 2021 were unchanged at 38¾, a trader said.

Avaya Inc.’s 10½% notes due 2021 were down 1½ points to 34. The notes were trading as high as 39 earlier this week on Monday, according to a market source.

Resolute Forest Products Inc.’s 5 7/8% notes due 2023 were down ¾ point to 76, a market source said.

© 2015 Prospect News.
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