Distressed paper mostly easier; CalRes, CYH, Altice issues lower; Rite Aid, Murray, iHeart paper firmer

By Paul Deckelman

New York, Nov. 28 – Bonds of distressed and other wise underperforming companies and sectors were seen largely softer on Tuesday, in line with a generally easier trend in the broader high-yield market.

Among the names seen on the downside on Tuesday were bellwether energy credit California Resources Corp. and the various issues from European telecom operator Altice.

Underperforming hospital company Community Health Systems Inc. were also looking a little green around the gills.

But drug store operator Rite Aid Corp. – which announced the successful completion of its transfer of the first batch of stores that it is selling to larger sector peer Walgreens Boots Alliance Inc. in a multi-billion-dollar deal – was solidly firmer.

So were coal company Murray Energy Corp. and broadcaster iHeart Media Inc.

Cal Res seen in retreat

Traders saw many names softer on Tuesday.

For instance, one said that California Resources’ 8% notes due 2022 – considered an energy sector bellwether credit – “had a good run recently, but with oil off, gave some of that back today.”

He saw the Los Angeles-based oil and natural gas exploration and production company’s issue down 1½ points, around 72 or 73 bid, on volume of more than $40 million.

A second market source had the bonds at 72 3/16 bid, calling that down more than 1½ points.

But a third saw the bonds bounce off their lows and end closer to the 73 bid level, calling it a 5/8 point loss on the day.

Crude prices were meantime lower on the day for a second straight day after three consecutive sessions before that on the upside.

West Texas Intermediate crude for January delivery lost 12 cents per barrel in New York Mercantile Exchange trading, settling at $57.99, following Monday’s 84-cent drop and Friday’s 93-cent gain.

January-contract North Sea Brent crude was off by 23 cents per barrel in London futures trading, to $63.61, having eased by 2 cents on Monday, in contrast to Friday’s 31-cent rise.

Altice bonds off

Netherlands-based cable and telecommunications company Altice’s various bonds were seen generally lower on the day, with the parent company’s 6 5/8% notes due 2023 down by around 5/8 point on the session at just under 103 bid, while its 7½% notes due 2026 lost ½ point to close at 105½ bid, both with around $9 million traded.

Its financing subsidiary’s bonds were busier, with the 7 5/8% notes due 2025 seen down 1½ points to close at 94 3/8 bid, while its 7¾% notes due 2022 were down a deuce on the day at 98½ bid, both with over $23 million having changed hands.

And its SFR Group subsidiary’s 7 3/8% notes due 2026 were down by nearly ½ point at just over 102 bid, on $24 million of turnover.

Community Health mostly lower

Franklin, Tenn.-based hospital operator Community Health System’s 6 7/8% notes due 2022 were down ¾ point on the day, ending at 58¾ bid, a trader said, while its 7 1/8% notes due 2020 were seen off by ¼ point, at 74½ bid, with about $9 million of each having traded.

Its 8% notes due 2019 were also easier on the day at 86½ bid, on volume of over $19 million.

Rite Aid rallies

On the upside, a trader said that Rite Aid Corp.’s stock “rallied a good bit,” in line with a generally stronger pharmacy sector, including gains by larger sector peers CVS and Walgreens, “and the stock gave the bonds a boost.”

He saw Camp Hill, Pa.-based drugstore chain operator Rite Aid’s 6 1/8% notes due 2023 up by nearly 1 point on the day, closing at 93½ bid, with over $18 million traded.

Rite Aid announced Tuesday that it had completed the handover of 97 of its stores to Walgreens – the first patch of what eventually be 1,932 stores, three distribution centers and related inventory that it is selling to its larger industry peer for an all-cash purchase price of $4.375 billion.

The asset sale is expected to be fully completed in the spring of 2018.

Other credits gain

Also on the upside, “Murray Energy moved up a little,” a trader said, seeing the St. Clairsville, Ohio-based coal mining company’s 11¼% notes due 2021 up by 1 1/8 point, at 56 1/8 bid.

Also among the gainers was San Antonio, Texas-based broadcaster and outdoor advertising company iHeart Media’s 9% notes due 2019, which ended at 74 bid, up ½ point on the day, with around $8 million traded.

A trader said that Toys ‘R’ Us Inc.’s 12% senior secured notes due 2021 “were a little better” on the day after having lost ½ point on Monday, closing Tuesday at 94 bid.

He saw the bankrupt Wayne, N.J.-based specialty retailer’s unsecured 8¾% notes due 2021 also “a little better,” closing at 33 bid.

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