PetSmart notes slide as Amazon announces dog food brand; Windstream issues fall on earnings

By James McCandless

San Antonio, May 3 – The distressed debt market experienced a slight rise in activity on Thursday, traders reported, as news drove trading.

PetSmart, Inc. notes declined after Amazon announced an in-house dog food brand for its Prime subscription customers.

Windstream Holdings, Inc. issues traded down after the company released its Q1 report, posting earnings that missed analyst expectations.

FirstEnergy Solutions Corp. paper was mixed after lawmakers sent a letter to President Trump urging him to ensure profitability to power plants at risk of closing.

Frontier Communications Corp. notes were mixed as the market continued to react to the company’s Q1 report released after market close Tuesday. Another company to post its Q1 report Tuesday, Intelsat SA, saw its issues mixed. Community Health Systems, Inc. paper was off in the medical space.

PetSmart down

Phoenix-based pet product retailer PetSmart notes were sent down after reports confirmed that Amazon.com, Inc. announced early Thursday that it would launch an in-house dog food brand that would be available to subscribers of its Amazon Prime service.

“That came out early this morning that really slammed PetSmart,” a trader said.

The 8 7/8% notes due 2025 fell about 3¼ points to close at 54¼ bid. The 5 7/8% notes due 2025 dropped 1¾ points to close at 70 bid.

Windstream down on earnings

Little Rock, Ark.-based network communications solutions name Windstream issues fell, market sources confirmed, after the company released its Q1 report early Thursday. The company disappointed analysts with a reported loss of $121.4 million this past quarter and fell short of earnings estimates with a loss of 65 cents per share instead of the predicted 59 cents per share.

The 6 3/8% notes due 2023 lost about ¾ point to close at around 57½ bid. The 7¾% notes due 2021 shaved off about ¼ point to close at around 73¾ bid.

FirstEnergy Solutions mixed

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw notes mixed after reports confirmed that members of Congress from Pennsylvania and West Virginia sent a letter to President Trump asking for his support in providing federal assistance to keep three at-risk power plants open.

The company announced recently that unless the Department of Energy steps in to guarantee profitability in the plants, they will be shut down. Republican representative Keith Rothfus of Pennsylvania said in the letter that the move is essential to protecting the region’s power grid.

“We need to look at this reliability and resilience and make sure the power is going to be there," Rothfus said.

Trump has signaled his support for the action, but Energy Secretary Rick Perry has voiced his skepticism. The department has yet to issue a decision.

The 6.05% paper due 2021 gained about ½ point to close at 46 bid. The 6.8% bonds due 2039 shot up about ½ point to close at around 46 bid The 6.85% bonds due 2034 remained level at 46½ bid.

On Wednesday, the 6.05% paper lost about ½ point, the 6.8% bonds fell ½ point and the 6.85% gained ¼ point.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications notes ended mixed. In its Q1 report released Tuesday, the company beat analyst estimates with a loss of 58 cents per share and $2.20 billion in revenue.

The 7 5/8% notes due 2024 lost ¼ point to close at 69¾ bid. The 10½% notes due 2022 traded up 2½ points to close at 93 bid. The 11% notes due 2025 shaved off ½ point to close at 80 bid.

Luxembourg-based satellite communications company Intelsat issues were also mixed Thursday. On Tuesday, the company reported a 56 cents per share loss, falling short of the 41 cents per share that analysts predicted.

The Intelsat (Luxembourg) SA 7¾% paper due 2021 was level at 71 bid. The 8 1/8% paper due 2023 edged up about ½ point to close at around 65½ bid.

Franklin, Tenn.-based hospital operator Community Health Systems saw paper trade down after CEO Wayne Smith warned shareholders on Wednesday that after selling six hospitals so far in 2018, more would be needed in order to reduce debt.

The 7 1/8% paper due 2020 lost about ½ point to close at 82¼ bid. The 6 7/8% paper due 2022 fell 1 point to close at 53½ bid.

“There was a jump in activity today, but only in some names,” a trader said. “Nobody is sure if this activity can hold once earnings season is over.”

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