Frontier notes continues gains on credit amendments; Community Health firm on BlackRock investment news

By Paul Deckelman and James McCandless

New York, Jan. 22 – As has been the case for the last several sessions in the market for distressed debt and notes and bonds of underperforming companies and sectors, Frontier Communications Corp. paper continued to move up on Monday, propelled by the wireline telecom provider’s recently unveiled changes in its credit agreement, seen enhancing its ability to meet upcoming note maturities.

Elsewhere, traders said that Community Health Systems Inc. senior notes gained on the news that investment firm BlackRock had increased its already sizable equity stake in the hospital operator.

Also seen better on Monday after a vote of confidence from its investors in the form of an enhanced stake in the company was power generating company First Energy Corp.

Frontier firming continues

Frontier Communications Corp. notes continued their gains across the board Monday on news that the company’s recently announced amendments to its credit agreement had been agreed to, paving the way for debt issuances to cover future senior note maturities.

“The amendments are a done deal,” according to a trader.

A second trader said that the Norwalk, Conn.-based wireline telecommunications company’s paper “continues to move up, noting that the changes in the credit terms mean “they’re kind of able to push out some short-term debt a little further out – it gives them some breathing room.”

He said that “the bonds were up a couple of points last week, and that’s continuing a little further this week.”

Frontier’s 10 5/8% notes due 2022 – which were trading a week ago around the 77 bid level – were up another 1½ points on Monday to close at 83½ bid, on volume of more than $27 million.

Its 7 1/8% notes due 2023 gained nearly 1¼ points on the day to end at 70 3/16 on around the same volume as the 10½s; those bonds had languished below 68 bid a week ago.

The company’s 11% notes due 2025 gained 1 point on the day, to 78¼ bid, on volume of more than $13 million.

Community Health climbs

Community Health Systems Inc.’s senior notes were seen having gained on the news that investment firm BlackRock had purchased 1 million shares in the Franklin, Tenn.-based hospital operator.

According to Securities and Exchange Commission filings disclosed on Friday, BlackRock had raised its ownership position to 13%.

A trader said this led to gains in the company’s 8% notes due 2019, which improved by ¾ point on the session, ending at 91¼ bid, on volume of more than $6 million.

Its 6 7/8% notes due 2022 gained more than 1 point on the session, to 67½ bid, but on only one or two large-sized trades, with the rest of the activity in smallish odd-lot transactions.

First Energy firmer

Another company that saw its notes rise was electric company FirstEnergy Corp., which received a $2.5 billion investment from several investors, according to SEC filings.

As part of the deal, the Akron, Ohio-based power producer has agreed to restructure its business to focus on operating transmission and distribution lines.

A market source said the deal resulted in a 3.5% rise in its 2021 senior notes and a 4.5% rise in its 2039 bonds.

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