Intelsat notes mixed on ratings upgrade; American Tire issues decline, snapping five-day positive streak

By James McCandless

San Antonio, July 18 – The distressed debt market focused volume on popular and news-driven names as the broader market slowed in pace on Wednesday.

Intelsat SA notes were mixed after Standard and Poor’s issued a ratings upgrade based on a recent buyback program.

American Tire Distributors issues declined, ending five days of trading up as executives seek to convince investors of its ability to generate new business.

Murray Energy Corp. notes were active but level after its chief executive officer made comments Tuesday about government interference in energy markets.

Frontier Communications Corp. notes were mixed again. The company recently announced the resignation of its chief financial officer.

Hornbeck Offshore Services, Inc. issues declined in the offshore oil and gas space.

Mallinckrodt plc paper fell in the medical space.

Intelsat mixed

Luxembourg-based satellite communications company Intelsat notes ended mixed, traders confirmed, after S&P issued an upgrade to the company’s corporate credit rating and affirmed a negative outlook based on a recent buy back of its Intelsat (Luxembourg) SA 7¾% senior notes due 2021 (see related story elsewhere in this issue).

The company has received positive attention since last Thursday’s decision by the Federal Communications Commission to consider a rule change that would allow mobile providers to access airwaves currently restricted to traditional broadcasters. Satellite firms that manage those airwaves could benefit from a potential fee structure allowing that access.

The 7¾% notes due 2021gained about 2 points to close at around 95½ bid. The 8 1/8% notes due 2023 lost about ¾ point to close at around 84½ bid.

On Tuesday, the 7¾% notes fell 1¾ point and the 8 1/8% notes were level.

American Tire down

Huntersville, N.C.-based tire distributor American Tire issues declined, market sources confirmed, ending a five-day upswing marked by a conference call on Friday where executives sought to downplay the recent termination of distribution deals from Bridgestone and Goodyear. The company told investors that it would not have problems finding new business to fill the gap.

“A lot of us saw the climb as optimistic,” a trader said. “These bonds will be hovering around the 30 mark for the immediate future.”

The 10¼% notes due 2022 lost about ½ point to close at around 34¼ bid.

On Tuesday, the 10¼% notes gained 2¾ points.

Murray Energy level

St. Clairsville, Ohio-based coal producer Murray Energy paper was active but level, traders confirmed. On Tuesday, CEO Robert Murray told a conference in Washington, D.C. that tax credits for wind farms should be scrapped and that many electric utilities were dropping coal for political reasons. He also urged the government to step up its work in protecting the coal industry.

Murray and other energy companies have lobbied the Department of Energy to provide federal assistance to at-risk coal and nuclear power plants by mandating grid operators to buy from them. Secretary of Energy Rick Perry has instructed the department to study the potential cost.

The 11½% paper due 2021, while trending upward, was level at around 72 bid.

On Tuesday, 11½% paper rose about 6¼ points.

Volume names trade

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

The 7 5/8% notes due 2024 gained about ½ point to close at around 69 bid. The 10½% notes due 2022 were level at around 90 bid. The 11% notes due 2025 lost about ¼ point to close at around 79½ bid.

On Tuesday, the 7 5/8% notes shaved off about ½ point, the 10½% notes lost about ¼ point and the 11% notes picked up about ¼ point.

Covington, La.-based oil and gas marine transportation company Hornbeck Offshore Services issues fell Wednesday. Traders say the declines are tied to a recent shakeup in the industry.

“Tidewater bought GulfMark Offshore,” a trader said. “Both are energy shipping companies and it shifts the landscape. It makes Hornbeck look a little weaker.”

The 5 7/8% notes due 2020 lost about 1½ points to close at around 78¼ bid. The 5% notes due 2021 fell 1 point to close at 73 bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 lost about ¼ point to close at around 83½ bid.

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