Community Health notes gain on ratings changes; American Tire notes rebound slightly

By James McCandless

San Antonio, June 29 – The end of the week in distressed debt saw steady activity in volume favorites with little movement elsewhere.

Community Health Systems, Inc.’s notes improved after S&P Global Ratings issued several ratings changes on the company.

American Tire Distributors’ issues gained back a small amount of losses from the last few days, spurred on when Bridgestone announced that it would end their passenger tire distribution deal.

Murray Energy Corp.’s paper declined. On Thursday, reports confirmed that the Department of Energy is studying the potential cost of federal assistance to at-risk coal and nuclear power plants.

Frontier Communications Corp.’s notes were mixed. Last week, the company announced the coming departure of its chief financial officer.

Intelsat SA’s notes gained. The company recently announced that it would buy back its 7¾% notes due 2021.

Mallinckrodt plc’s paper rose in the medical space.

Community Health up

Franklin, Tenn.-based hospital operator Community Health Systems’ notes improved, traders confirmed, amid several ratings changes. S&P raised the company’s corporate credit rating and assigned several issue-level ratings to new and existing tranches (see related story elsewhere in this issue).

On Thursday, subsidiary CHS/Community Health Systems, Inc. priced a $1.03 billion offering of 8 5/8% senior secured notes due 2024 after announcing the deal on Wednesday.

The company announced Tuesday that it had entered into a definitive agreement to sell one of its Oklahoma hospitals to a subsidiary of Oklahoma City-based hospital facilities operator Integris Health.

The 7 1/8% notes due 2020 rose about 2¼ points to close at around 91 bid. The 6 7/8% notes due 2022 gained about ¾ point to close at around 52¼ bid.

On Thursday, the 7 1/8% notes lost about 2¼ points and the 6 7/8% fell about 2 points.

American Tire gains

Huntersville, N.C.-based tire distributor American Tire’s issues halted the tide of losses Friday, market sources confirmed. On Thursday, Bridgestone announced that it would end its passenger tire distribution deal with the company. Earlier this year, Goodyear also announced that it would end its distribution deal with the company.

“Don’t expect an upward trajectory anytime soon,” a trader said. “There was some question when it was around the 50 level as to whether it could get back up to par. That’s not a real question anymore.”

The 10¼% notes due 2022 picked up about ½ point to close at 23 bid.

On Wednesday and Thursday, the 10¼% notes lost a total of about 33¾ points.

Murray Energy off

St. Clairsville, Ohio-based coal producer Murray Energy’s paper gained, traders reported. On Thursday, reports indicated that the Department of Energy is studying the cost of providing federal assistance to at-risk coal and nuclear power plants. Secretary of energy Rick Perry is reportedly weighing multiple options, including mandating grid operators to purchase power from them.

“Earlier this year I thought this was unlikely,” a trader said. “But these companies, especially Murray, seem to have the ear of some federal officials, so anything’s possible.”

The 11¼% paper due 2021 shaved off about 1 point to close at 59¼ bid.

On Thursday, the 11¼% paper lost about 1 point.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications’ notes were mixed. Last week, the company announced the coming resignation of CFO Perley McBride. Recently, an auction for the company’s Florida assets did not produce a satisfactory bid.

The 7 5/8% notes due 2024 lost about ¾ point to close at around 69¾ bid. The 10½% notes due 2022 dropped about ¼ point to close at around 90¾ bid. The 11% notes due 2025 were level at around 80 bid.

On Thursday, the 7 5/8% notes were level, the 10½% notes gained about 1½ points and the 11% notes dropped 1 point.

Luxembourg-based satellite communications company Intelsat’s notes gained. Recently, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 traded up about 2 points to close at around 95 bid. The 8 1/8% notes due 2023 gained about ½ point to close at 80¾ bid.

On Thursday, the 7¾% notes rose about 1 point and the 8 1/8% notes lost about ¼ point.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 trade up 1¼ points to close at 86¾ bid.

“Things are slowing down for the Fourth of July,” a trader said. “Even the relatively low levels we saw today probably won’t be reached on the next few trading days barring some major catalyst.”

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