Community Health ‘lackluster’ to cap gaining week; retailers mixed after J.C. Penney announces closings

By Colin Hanner

Chicago, Feb. 24 – As the week came to a close in the distressed market on Friday, only a few issues traded with any notable heft behind them, a trader said, and issues that traded during the week continued to top the most active list.

It was Franklin, Tenn.-based hospital operator Community Health Systems, Inc. that was “lackluster, and a tad firmer” on the session, a trader said. Though it saw “a bunch of trades,” the trader said it was likely that they were mostly “all scraps.”

Its most notable issue traded up marginally on the day, a trader said, though another said they were sideways on the day.

Traditional retailers took J.C. Penney Co, Inc.’s fourth quarter results in stride, at least in the distressed space, after the company announced that it would close “approximately 130-140 stores over the next few months,” according to a news release.

Neiman Marcus Group, Inc.’s two issues both posted hefty gains, a movement atypical when a fellow retailer has posted poor results in recent months.

Adding that Avaya, Inc., Intelsat SA and Valeant Pharmaceuticals International, Inc. were among the most notable, a trader said that from there on out, “We’re already down to the short strokes on trades.”

Hydrocarbon producer Calumet Specialty Product Partners, LP was up on the session, iHeartCommunications, Inc. was down slightly on the day and a handful of other one-offs were mixed on an otherwise inactive session.

Community Health ‘scrapping’ up

Gains for the hospital operator may have ceased on Friday after four-straight sessions of growth caused by an asset sale announcement and positive quarterly results.

The 6 7/8% notes due 2022 were up 1/8 point to 87 1/8, a trader said, though another trader said it “looked like it was sideways.”

Retailers ride store closings

The recent trend has been one retailer’s bad news is felt among others in the sector, but that was not the case on Friday when J.C. Penney announced it was closing more than 100 stores soon.

“There was much ado about nothing,” a trader said about the chatter surrounding the results, adding that the company’s 7.4% notes due 2037 were unchanged at 80½ after the news.

Addressing the threat of online retail to brick-and-mortar stores, Marvin R. Ellison, chairman and chief executive officer of J.C. Penney, said the presence of a storefront could help grow parts of its business, including beauty, home and special sizes.

“We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers,” Ellison said.

Elsewhere in the retail space, Neiman Marcus Group’s two distressed issues posted multi-point gains of their own.

The 8% notes due 2021 were up 2 points to 62½, a trader said. Another trader said they were up “a couple of points” to 62.

The 8¾% notes due 2021 were up 3¼ points to 57½.

Notables move higher

Leading a list of notable distressed names that trended higher on the day was telecommunications company Avaya, whose 7% notes due 2017 were up anywhere from ¼-¾ point to 79, according to two traders.

Satellite communications company Intelsat Jackson Holdings SA’s 7¼% notes due 2020 were up ¾ point to 87¾.

Meanwhile, Intelsat Connect Finance SA’s 12½% notes due 2022 were up “almost 2 points” to 76, a trader said.

Valeant Pharmaceuticals’ 5 7/8% notes due 2023 were unchanged at 82, a market source said, and its 7½% notes due 2021 were up ½ point to 93½.

Low-volume movers

Calumet Specialty Products’ 6½% notes due 2021 were up 1/8 to 87 5/8, a trader said.

Moving down marginally were iHeartCommunications’ 14% notes due 2021, which were down 3/8 point to 39½.

And California Resources Corp.’s 8% notes due 2022 were down 1½ points to 87.

© 2015 Prospect News.
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