Murray Energy notes improve on CEO comments; American Tire issues continue rise as market assesses future

By James McCandless

San Antonio, July 17 – Trading in the distressed debt market centered on more topical names on Tuesday as broader volume held steady.

Murray Energy Corp. notes improved as its chief executive officer made comments at a Tuesday conference calling for the end of government interference in energy markets.

American Tire Distributors issues gained again for the fifth straight day as executives try to convince investors of the company’s potential growth.

Intelsat SA paper was mixed again. Last Thursday, the Federal Communications Commission began a process that could allow mobile operators to access part of the U.S. C-band spectrum.

Frontier Communications Corp. notes were mixed. Recently, the company announced the resignation of its chief financial officer.

Digicel Group Ltd. issues rose. Recently, bondholders appealed to the company to increase interest rates for some securities.

PetSmart, Inc. paper was mixed. The company recently filed a lawsuit against a former loan agent in a dispute over a recent equity transfer.

Murray Energy gains

St. Clairsville, Ohio-based coal producer Murray Energy notes gained, traders confirmed, amid comments from CEO Robert Murray about the need to limit government interference in energy markets. Murray told a conference in Washington, D.C. that tax credits for wind farms should be phased out and that many electric utilities were dropping coal for political reasons. He also said that the Trump administration should take more action to protect the coal industry.

“I do not believe that they have been as effective as they could be,” Murray said.

Murray and other energy executives have lobbied the Department of Energy to provide federal assistance to at-risk coal and nuclear power plants. Secretary of Energy Rick Perry has said that the department is studying the potential cost of implementing the plan.

The 11½% notes due 2021 jumped up about 6¼ points to close at 72 bid.

American Tire continues rise

Huntersville, N.C.-based tire distributor American Tire issues rose for the fifth straight trading day, market sources confirmed. Company executives held a conference call on Friday to try to reassure investors that the recent termination of distribution deals from Bridgestone and Goodyear would not hurt the company’s business moving forward. The company has said that it is aggressively pursuing new business and is working to expand its digital presence.

“Investors must have heard something they liked since the notes keep trading up,” a trader said. “But I’m still skeptical about what comes next. They’ve gotten by on maintaining a certain level of debt that may be harder to work with now.”

The 10¼% notes due 2022 gained 2¾ points to close at 34¾ bid.

On Monday, the 10¼% notes rose about 4½ points.

Intelsat mixed

Luxembourg-based satellite communications company Intelsat paper was mixed, traders confirmed. Last Thursday, reports surfaced that the FCC is considering a rule change that would open up airwaves currently limited to traditional broadcasters for use by mobile providers. The move could pave the way for a new revenue stream for satellite firms.

Recently, the company announced a buyback program for its Intelsat (Luxembourg) SA 7¾% notes due 2021.

The 7¾% paper due 2021 lost 1¾ point to close at 93½ bid. The 8 1/8% paper due 2023 were level at around 85½ bid.

On Monday, the 7¾% paper traded up about ¾ point and the 8 1/8% paper fell about ¾ point.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed again. The company recently announced the resignation of CFO Perley McBride.

The 7 5/8% notes due 2024 shaved off about ½ point to close at around 68½ bid. The 10½% notes due 2022 lost about ¼ point to close at around 90 bid. The 11% notes due 2025 edged up about ¼ point to close at 79¾ bid.

On Monday, 7 5/8% notes gained about ¼ point, the 10½% notes rose about ½ point and the 11% notes declined about ½ point.

Bermuda-based mobile phone network provider Digicel issues rose. Noteholders are asking the company to increase the market interest rate on its 8¼ notes due 2020 to 30%.

The 8¼% notes due 2020 picked up about 1 point to close at around 74 bid.

On Monday, the 8¼% notes dropped 1½ point.

Phoenix-based pet supplies retailer PetSmart issues were mixed. A recent contentious equity transfer was highlighted after the company filed a lawsuit against former loan agent Citigroup for alleged breach of contract.

The 5 7/8% paper due 2025 gained about 1 point to close at 78½ bid. The 8 7/8% paper due 2025 lost about ½ point to close at around 67½ bid.

On Monday, the 5 7/8% paper lost about ¼ point and the 8 7/8% paper gained about 1 point.

“Slowly but surely we’re picking up some steam as far as volume is concerned,” a trader said. “I think we will see a steady rise that culminates in the next round of earnings.”

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