Murray Energy notes fall as Q1 report issued; American Tire issues rise as company searches for business

By James McCandless

San Antonio, May 15 – The distressed debt market saw activity slowly pick up throughout the day on Tuesday as earnings season nears the end.

Murray Energy Corp. notes traded down after the company posted its Q1 report, disappointing investors.

American Tire Distributors issues rose in a brief respite after weeks of declines over losing its business relationship with Goodyear.

Ultra Petroleum Corp. paper traded up, stemming a downward trend set off after the company released its Q1 report last Thursday.

Intelsat SA notes were mixed. The company posted a disappointing Q1 report recently. Frontier Communications Corp. issues were mixed on the day. It was another telecom name that posted a worrying Q1 report recently. Mallinckrodt plc paper rose.

Murray Energy slips

St. Clairsville, Ohio-based coal producer Murray Energy notes declined after the company issued its Q1 report, with traders confirming that investors were left disappointed.

“Obviously, it’s a private company so those results aren’t available to the public,” a trader said. “But from what we’ve been hearing and the way the bonds are trading it wasn’t good.”

The 11¼% notes due 2021 lost 2¼ points to close at 40¼ bid.

American Tire gains

Huntersville, N.C.-based tire distributor American Tire issues traded up, market sources confirmed, as the company continues to seek new business to plug the hole left by Goodyear after it severed ties with American Tire to form a partnership with Bridgestone. The former partnership was worth 20% of the company’s business.

“At this point, those bonds have a better chance of dropping to zero than reaching par again,” a trader said. “But for now, it’ll flounder up and down.”

The 10¼% notes due 2022 gained 1 point to close at 49 bid.

Ultra Petroleum up

Houston-based independent oil and gas producer Ultra Petroleum saw paper trade up Tuesday, traders confirmed. Last Thursday, the company’s Q1 reported showed a profit of 24 cents per share and a net income of $47.5 million, reversing a loss from last quarter.

“There wasn’t much else going on to explain the spike in trades,” a trader said. “They’re on shaky ground though, which is partly based on how oil prices go.”

The 7 1/8% paper due 2025 jumped up about 4 points to close at 64 bid. The 6 7/8% paper due 2022 rose about 5½ points to close at 69¾ bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes were mixed Tuesday. Recently, the company reported a 56 cents per share loss in its Q1 report, missing analyst predictions of 41 cents per share.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 edged up about ¼ point to close at around 80 bid. The 8 1/8% notes due 2023 shaved off about ¼ point to close at 71 bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications, another name in the distressed telecom space, saw issues mixed. Last week, the company beat analyst estimates by reporting a Q1 loss of 58 cents per share and $2.20 billion in revenue.

The 7 5/8% notes due 2024 traded up about ¾ point to close at 71½ bid. The 10½% notes due 2022 gained about ¾ point to close at around 93 bid. The 11% notes due 2025 lost about ½ point to close at 82¼ bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 jump about 3½ points to close at around 80¾ bid.

“Today was a little better than Monday, but that isn’t saying much,” a trader said. “This week already feels like not much is going to happen. There isn’t much in the way of earnings left so there won’t be many catalysts to expect in the short term.”

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