Community Health notes decline a day after earnings; American Tire ends week gaining again amid layoffs

By James McCandless

San Antonio, July 27 – Trading in the distressed debt market continued to center around names with news surrounding them to close the week.

Community Health Systems, Inc. notes declined Friday despite Thursday’s release of its Q2 earnings report, showing smaller losses than expected.

American Tire Distributors issues improved for a third day. On Wednesday, the company announced a round of layoffs as part of its reorganization strategy.

Ensco plc paper slipped. On Thursday morning, the company posted better than expected Q2 earnings.

Intelsat SA notes gained. The Federal Communications Commission is considering a rule change that could benefit satellite firms.

Frontier Communications Corp. issues ended mixed again. CFO Perley McBride is preparing to leave the company.

Mallinckrodt plc paper ended the week down.

Community Health down

Franklin, Tenn.-based hospital operator Community Health Systems notes fell at the end of the week, traders confirmed. On Thursday, the company released a Q2 earnings report that surpassed the expectations of analysts. The company posted a 1 cent loss per share, beating estimates of a 43 cent loss per share. Analysts were also optimistic about the $3.5 billion in net operating revenues.

“They’ve made a lot of moves to shed assets and fight off their debt,” a trader said. “They’re going to continue that and may come out of this year looking better than they went in.”

The 7 1/8% notes due 2020 lost about ¼ point to close at around 87 bid. The 6 7/8% notes due 2022 fell about ½ point to close at around 49 bid.

On Thursday, the 7 1/8% notes lost about 1 point and the 6 7/8% notes gained 1 point.

American Tire rises

Huntersville, N.C.-based tire distributor American Tire issues traded up again, market sources confirmed, steadily climbing this week after the company announced on Wednesday that it would be laying off 100 employees in its marketing subsidiary Tire Pros. The company is implementing its reorganization strategy to dampen the effect of losing two distribution deals with Bridgestone and Goodyear.

“It’s a little surprising that the bonds are sustaining at this level,” a trader said. “A bit further up and it might look good again. But whatever happens, they’re heading for a restructure.”

The 10¼% notes due 2022 rose about 3 points to close at around 39 bid.

On Thursday, the 10¼% notes added 4¼ points.

Ensco lowers

London-based oil and gas drilling company Ensco paper fell, traders confirmed. On Thursday, the company posted its Q2 earnings report. It reported a 30 cent loss per share and reported $458.5 million in revenue, beating analyst estimates of a 33 cent loss per share and $453 million, respectively.

The 5¾% bonds due 2044 dropped about ¼ point to close at around 72¼ bid.

On Thursday, the 5¾% bonds rose about ¾ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes improved. The FCC is considering a rule change that would let mobile providers use airwaves currently being used solely by traditional broadcasters and managed by satellite firms, potentially opening up a new revenue stream for satellite companies.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 picked up about 1¼ points to close at 95 bid. The 8 1/8% notes due 2023 gained about ½ point to close at around 86¼ bid.

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

Norwalk, Conn.-based wireline communications name Frontier Communications issues were mixed. CFO Perley McBride is about to leave the company.

The 7 5/8% notes due 2024 gained about 1¾ points to close at around 68½ bid. The 10½% notes due 2022 lost about ¾ point to close at about 89¾ bid. The 11% notes due 2025 shed 1¼ points to close at 81 bid.

On Thursday, the 7 5/8% notes fell about 1 point, the 10½% notes rose about 1½ points, and 11% notes gained about ¾ point.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 lose about ½ point to close at around 83 bid.

On Thursday, the 4¾% paper added about ¼ point.

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