Intelsat notes up as Q1 sales projections topped; Frontier Communications rises as earnings exceed estimates

By James McCandless

San Antonio, May 1 – The distressed debt market experienced a slower day Tuesday, traders reported, as many of the day’s moves were precipitated by news.

Intelsat SA notes gained as the company posted its Q1 earnings, falling short of earnings estimates but beating sales projections.

Frontier Communications Corp. issues were mixed as the company posted Q1 numbers after market close with earnings that beat estimates.

Community Health Systems, Inc. paper jumped after the company posted better than expected Q1 earnings.

Ensco plc notes dipped as the market continues to react to the company’s disappointing Q1 report posted last Friday. FirstEnergy Solutions Corp. issues were mixed as the company continues to lobby for federal assistance to prevent power plant closures. Mallinckrodt plc paper was down in the medical space.

Intelsat gains on earnings

Luxembourg-based satellite communications company Intelsat’s notes rose after the company posted Q1 numbers on Tuesday, reports confirmed. The company reported a loss of 56 cents per share, worse than the 41 cents per share loss analysts predicted. But the company exceeded $520 million in sales expectations with $543.8 million in sales.

“It’s a little lower than what was expected, but the sales part is a promising indicator for future growth,” a trader said.

Recently, a subsidiary of the company was selected to participate in a satellite payload project for the Federal Aviation Administration.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 gained about ½ point to close at around 68½ bid. The 8 1/8% notes due 2023 jumped up about 3¾ points to close at 66 bid.

Frontier mixed

Norwalk, Conn.-based wireline telecom name Frontier Communications issues were mixed as the company posted Q1 results after market close Tuesday, traders said. The company reported a loss of 58 cents per share, outpacing analyst estimates of a loss of 83 cents per share. The company’s revenue of $2.20 billion also beat estimates, with analysts expecting $2.19 billion.

As part of a plan to reduce its debt, the company is continuing its search for buyers for certain assets.

The 7 5/8% notes due 2024 lost about 1½ points to close at around 64¼ bid. The 10½% notes due 2022 edged up about ¼ point to close at around 88½ bid. The 11% notes due 2025 gained 1 point to close at 77¾ bid.

Community Health up

Franklin, Tenn.-based hospital operator Community Health Systems also posted Q1 numbers on Tuesday, a market source confirmed. While analysts expected the company to post a loss of 26 cents per share, the company beat expectations by reporting a 22 cent loss per share. The company also surprised investors by posting a 21% reduction in operating costs.

As part of its divestiture plan, the company sold six of its hospitals in order to reduce its debt.

The 7 1/8% notes due 2020 gained ½ point to close at 81¾ bid. The 6 7/8% notes due 2022 jumped up 1¼ points to close at 56 bid.

Volume names trade

Britain-based oil driller Ensco notes were down as the market still reacts to its disappointing Q1 report posted last Friday. The report listed an earnings loss of 25 cents per share of common stock and revenue was $417 million.

The 5¾% bonds due 2044 shaved off 1 point to close at 68½ bid.

On Monday, the 5¾% bonds were level at 69½ bid.

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw issues mixed as it awaits a decision from the government over whether federal assistance will be granted to keep open at-risk power plants that the company is otherwise planning to close.

The 6.05% notes due 2021 dropped 1 point to close at 46 bid. The 6.8% bonds due 2039 were level at 46 bid. The 11% notes due 2025 lost 1 point to close at 46¼ point.

On Monday, the 6.05% notes were level, the 6.8% bonds lost about 1 point, and the 6.85% bonds rose ¼ point.

In the medical space, Britain-based drug-maker Mallinckrodt saw its 4¾% paper due 2023 lost about 2¼ points to close at around 71 bid.

“Besides the names that were driven by earnings, today was pretty quiet,” a trader said. “It looks like, at least in our market, activity from companies putting out earnings has been restricted to those companies.”

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