Toys ‘R’ Us active on reports of liquidation; Frontier active after string of positive news

By James McCandless

San Antonio, March 9 – Traders reported a lower than average day of trading on Friday, capping off a slow week in the distressed debt market.

Toys “R” Us, Inc. notes sprung up in activity towards the end of the week after reports surfaced that the company is considering liquidating its U.S. assets as soon as next week.

Issues from Frontier Communications Corp. continued to drive much of the volume to close the week after a string of positive news that has traders cautiously optimistic on the name.

J. C. Penney Co., Inc. saw its paper dip on the day. On Thursday, the company priced a new issue.

The week saw more high volume activity for Intelsat SA, remaining at the top of the distressed telecom space. Negative news has kept Community Health Systems, Inc., a popular name in the healthcare sector, on the list of names whose future prospects remain grim. Meanwhile in energy, Ensco plc made up for Thursday’s losses while Northern Oil and Gas, Inc. rolled on as a volume favorite of the sector.

Toys active on reports

Wayne, N.J.-based bankrupt toy retailer Toys “R” Us saw its notes become active as the week drew to a close on reports that the company is considering liquidating the totality of its U.S. assets after failing to find a buyer in time, though a rescue deal is still possible. The company already received a $3.1 billion loan to keep operations going during the bankruptcy proceedings.

“It’s all happening pretty fast,” a trader said. “There was some chatter about it at the beginning of the week but I was skeptical until I started seeing the headlines. I’m not sure they’ll be able to find a buyer in time.”

The company’s 8¾% notes due 2021 fell about ½ point to close near 10¾ bid. The 7 3/8% notes due 2018 dropped 4½ points to close at 12 bid.

Frontier ends week active

Norwalk, Conn.-based wireline telecom name Frontier Communications saw its issues cap off a busy few weeks as some of the most active tranches in Friday trading, a market source confirmed.

On Thursday, the company priced a $1.6 billion issue of eight-year second-lien secured notes at par with an 8½% yield. The week before, the company made the move of scrapping its quarterly dividend, which was received positively by traders.

While in high volume, the 7 5/8% issue due 2024 remained steady at 61¼ bid. The 10½% issue due 2022 rose about ¾ point to close at just above 90½ bid. The 11% paper due 2025 shaved off 2 points to close at 80 bid.

J. C. Penney trades after pricing

Plano, Texas-based department store name J. C. Penney also closed the week active.

On Thursday, the company priced a $400 million issue of seven-year senior secured second priority notes at an 8 5/8% yield.

In addition, the paper has been active since the retailer reported a disappointing Q4 and issued layoffs across the company last week.

During Friday’s session the 7.4% bonds due 2037 fell 3½ points to close at 71 bid.

Volume favorites

Staying atop the distressed telecom space was Luxembourg-based satellite communications company Intelsat, slightly bolstered by reports of changes that could be made to the United States’ 5G network that could potentially benefit satellite firms.

The Intelsat Jackson Holdings SA 5½% paper due 2023 edged down slightly but remained at about 83 bid. The 7¼% paper due 2020 rose ¼ point to close at 94¼ bid.

Recent negative news has spurred activity in Franklin, Tenn.-based hospital operator Community Health Systems, which has spurred much of its recent activity. A trifecta of a less-than-stellar fourth quarter report, potential hospital closures and ratings downgrades has driven recent traded.

The company’s 7 1/8% notes due 2020 lost ¼ point to close at 82 bid. The 6 7/8% notes due 2022 also dropped by ¼ point to close at 60 bid.

Britain-based oil driller Ensco’s 5¾% bonds due 2044 reversed Thursday’s losses and then some by rising about 3¼ points to close at just under 70¼ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issue due 2020 traded down about ¼ point to close at 92 bid.

“This week wasn’t too bad, but it wasn’t as good as it could’ve been,” a trader said. “I am not sure if many people are going to be enticed to put their money into this market with the potential for upheaval in the equity markets. But we’ll get a better picture of that next week.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.