FirstEnergy Solutions notes mixed on bankruptcy settlement; Sears mixed as Amazon tire program expands

By James McCandless

San Antonio, Aug. 28 – News-driven names continued to bubble up to the top of distressed debt trading on Tuesday.

FirstEnergy Solutions Corp. notes were mixed following reports late Monday that its parent company has reached a bankruptcy settlement for its subsidiaries.

Sears Holdings Corp. issues were mixed as the company’s tire installation partnership with Amazon is expanded.

Diebold Nixdorf, Inc. paper was level. On Monday, the company secured a $650 million rescue loan from two institutional lenders.

Intelsat SA notes were mixed again. Recently, a subsidiary priced an issue of $1.25 billion in senior notes.

Frontier Communications Corp. issues declined. A recent second-quarter earnings report missed analyst expectations.

J.C. Penney Co., Inc. paper fell. A recent second-quarter earnings report triggered a string of ratings downgrades and negative attention.

FirstEnergy Solutions mixed

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw its notes trade mixed, traders said. Reports confirmed late Monday that the company has entered into a definitive settlement agreement worth $1.1 billion in the Chapter 11 bankruptcy proceedings for FirstEnergy Solutions, FirstEnergy Nuclear Operating Co. and other subsidiaries.

The agreement reportedly addresses all potential claims among the settling parties and other creditors.

“That’s something that gets them over a big hill,” a trader said.

The 6.05% notes due 2021 gained about 2 points to close at 62 bid. The 6.8% bonds due 2039 shaved off ¼ point to close at 61 bid. The 6.85% bonds due 2034 were active but level at 61½ bid.

Sears also mixed

Hoffman Estates, Ill.-based department store chain Sears’ issues also ended mixed, market sources said, as reports confirmed Tuesday that the company is expanding its tire installation partnership with Amazon.com, Inc.

The program, piloted at 47 locations in May, allows customers purchasing replacement tires from Amazon to ship them to any of Sears’ Auto Center locations for installation.

“The bonds don’t really trade that often unless there’s news like this,” a trader said. “And with how well the stock did today, I’m not surprised that some of that spilled over to our end.”

The 6 5/8% notes due 2018 lost about 1 point to close at around 93 bid. The 8% notes due 2019 jumped up 3 points to close at around 44 bid.

Diebold level

North Canton, Ohio-based connected commerce solutions company Diebold paper was level, traders said, despite heightened activity. On Monday, reports confirmed that the company has secured a $650 million rescue loan from two institutional lenders in a bid to stabilize the company’s financial outlook following a negative earnings report.

Last week, JPMorgan Chase & Co. was tapped to shop the loan to prospective lenders.

The 8½% notes due 2024 were level at 70½ bid.

On Monday, those notes rose 4¾ points.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed Tuesday. Subsidiary Intelsat Connect Finance SA recently priced a $1.25 billion offering of senior notes due 2023.

In a recent second-quarter earnings report, the company posted a 38 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 fell ¼ point to close at 96¼ bid. The 8 1/8% notes due 2023 rose about ¼ point to close at around 87 bid.

On Monday, the 7¾% notes added about ½ point and the 8 1/8% notes dropped about ¼ point.

Norwalk, Conn.-based wireline communications name Frontier Communications issues declined in the telecom space.

After a recent negative earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 traded down about 1 point to close at 64½ bid. The 10½% notes due 2022 lost ¼ point to close at 89½ bid. The 11% notes due 2025 fell about ¼ point to close at around 78¼ bid.

On Monday, the 7 5/8% notes lost about ¼ point, the 10½% notes were level and the 11% notes dipped about ¼ point.

Plano, Texas-based department store name J.C. Penney’s paper fell. Recently, the company reported a 38 cents per share loss, missing analyst expectations of a 5 cents per share loss. Following the report, the company experienced a string of ratings downgrades.

The 7.4% bonds due 2037 lost about 1 point to close at around 50½ bid.

On Monday, the 7.4% bonds gained 2¾ points.

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