Frontier surge continues as amendment launched; energy issues ease; Exact Sciences rebounds

By Paul Deckelman

New York, Jan. 18 – Frontier Communications Corp. paper was the most prominent name among bonds and notes of underperforming companies and sectors on Thursday, firming smartly in active trading for a third consecutive session. The surge follows the wireline telecommunications company’s launch of amendments to its credit agreements that will loosen up the terms of some of its covenants, potentially allowing it to issue new debt in order to address upcoming senior note maturities.

In that same communications sector, wireline peer CenturyLink, Inc.’s paper was lower, while satellite operator Intelsat SA was also off.

Energy names such as California Resources Corp. and MEG Energy Corp. eased amid a slight decline in crude oil prices.

In the convertibles market, Exact Sciences Corp.’s recently priced notes were on the rebound Thursday after having gotten hammered on Wednesday as the biotechnology company’s underlying shares tanked in response to a positive clinical trial by an industry rival.

Frontier up on loan changes

A trader said that Norwalk, Conn.-based wireline telecommunications provider Frontier Communications’ paper “had another up day – they were better again” by 1½ to 2 points.

It was the third straight session that its paper had gained multiple points.

“They were pretty active and traded up quite a bit,” another trader said, seeing the company’s 10½% notes due 2022 “up close to 3 points” as they ended at 80 5/8 bid.

He said the company’s 11% notes due 2025 “were probably not up as much,” ending around 77 bid.

“The short-dated ones were up a couple.”

He said that Frontier “continues to trade up after they filed an amendment to their credit facility to loosen the terms, making possible a potential raise of new debt.”

Frontier said in 8-Kfiling Wednesday with the Securities and Exchange Commission that it had launched amendments to its credit agreements with JPMorgan Chase Bank, NA and CoBank ACB in order to replace the existing leverage ratio maintenance test in the credit agreements with a first-lien net leverage ratio maintenance test.

The amendment applies to Frontier’s revolver, $1.5 billion term loan A and $1.5 billion term loan B.

In a presentation to its lenders, the company said it believes the modification will “remove the covenant overhang from the market and better position it to address upcoming senior note maturities.”

Frontier has $578 million of bonds due in the fourth quarter, $428 million due in 2019 and less than $1 billion due in 2020.

The company called the near-term maturity profile “manageable.”

The deadline for the amendment is 5 p.m. ET on Friday.

Other telecom names easier

Elsewhere in that same sector, a trader said that Monroe, La.-based wireline provider CenturyLink’s 6¾% notes due 2023 finished off by ¾ point at 99¼ bid.

Little Rock, Ark.-based sector peer Windstream Services’ 6 3/8% notes due 2023 closed down 1 full point, a trader said, at 60¼ bid.

Luxembourg-based communications satellite company Intelsat’s paper was also seen having lost some altitude on Thursday.

Its Intelsat Connect Finance SA 12½% notes due 2022 ended at 79½ bid, down over 1¾ points.

The company’s Intelsat Jackson Holdings SA 7¼% notes due 2020 closed at 90¼ bid, down ¾ point on the day.

Energy names easier

In the oil and natural gas arena, California Resources’ 8% senior secured second-lien notes due 2022 “were down a bit,” a trader said, seeing the notes at 87 bid, lower by ¾ point on the day.

Another trader pegged the Los Angeles-based exploration and production operator’s bonds off by ½ point on the session.

Calgary, Alta.-based shale company MEG Energy’s 7% notes due 2024 ended at 89¼ bid, down ¾ point.

Exact Sciences on the rebound

After taking a beating on Wednesday, Exact Sciences’ recently priced 1% convertible notes due 2025 rebounded slightly in scattered trading activity on Thursday. The notes gained about 1.5 points to solidify around 98.

Exact Sciences’ stock was also up on Thursday after a sell-off on Wednesday that was triggered by positive results in a clinical study from a Taiwan-based competitor. The stock closed Thursday at $48.79, an increase of 2.33%.

The Madison, Wis.-based molecular diagnostics company, which is focused on the early detection of colorectal cancer, priced $600 million of seven-year convertible notes with a 1% coupon and fixed conversion premium of 37% at an issue price of 98.75 after the market close on Jan. 11.

The greenshoe was fully exercised, lifting the size of the deal to $690 million. The notes solidified around 102 in their first few days of trading before nose-diving to the 96 to 97 range on Wednesday.

-Abigail W. Adams contributed to this review

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