Community Health notes gain after earnings release; Ensco, Rowan issues mixed as merger approved

By James McCandless

San Antonio, Feb. 21 – The Thursday session saw more focus on earnings releases and other news-driven names in the distressed debt realm.

Community Health Systems, Inc.’s notes gained after the company reported higher revenues in its Q4 earnings.

In energy, Ensco plc and Rowan Cos. plc’s paper traded in opposite directions after shareholders for both companies voted to approve a merger.

Oil futures saw a slight dip, which served as a backdrop for California Resources Corp.’s rising notes and Weatherford International plc’s falling issues.

Auto parts name Delphi Technologies plc’s paper saw a boost after reporting strong earnings.

Meanwhile in telecom, Intelsat SA’s notes slipped off of recent gains after Wednesday’s earnings release.

Sector peer Windstream Holdings, Inc.’s and former subsidiary Uniti Group Inc.’s issues fell in the continuing aftermath of an adverse legal result.

Community Health up

Community Health’s notes were seen gaining on Thursday, traders said.

The 7 1/8% notes due 2020 picked up 2 points to close at 91 bid. The 6 7/8% notes due 2022 rose 1¼ points to close at 59¾ bid.

After the close on Wednesday, the Franklin, Tenn.-based hospital operator released its fourth-quarter earnings report, yielding positive results.

It reported a loss of 42 cents per share, better than the 58 cents per share loss that analysts predicted.

It also showed better-than-expected revenues of $3.45 billion.

“A lot of that revenue came from those hospitals they sold,” a trader said. “People are starting to use the word ‘turnaround.’ But I think that’s too early to call.”

In 2018, the company sold off 14 of its hospitals as part of its debt reduction plan.

Ensco, Rowan mixed

Meanwhile, in the energy space, Ensco issues traded higher, market sources said.

The 7¾% notes due 2026 added ½ point to close at to close at 84¾ bid. The 7.2% notes due 2027 gained ¾ point to close at 82 bid.

Its presumed merger partner, Rowan, saw its paper move towards the opposite side of the spectrum.

The 4¾% paper due 2024 dropped ½ point to close at 80½ bid. The 7 3/8% paper due 2025 shaved off ¼ point to close at 86½ bid.

The contract drillers, based in London and Houston, respectively, jointly announced on Thursday that shareholders for both names had approved the pending merger with more than a 90% majority.

As part of a recently altered stock exchange ratio, Rowan shareholders stand to receive 2.75 Ensco shares for every Rowan share they own.

The merger was originally announced in October 2018.

Completion of the merger is expected in the first half of 2019.

Oil names mixed

Softer oil futures led to varied results for distressed oil tranches, traders said.

Los Angeles-based independent oil and gas producer California Resources’ notes ended the day better.

The 6% notes due 2024 rose ½ point to close at 69 bid. The 8% notes due 2022 picked up 1 point to close at 82 bid.

Baar, Switzerland-based oilfield services provider Weatherford’s issues followed oil futures downward.

The 8¼% notes due 2023 lost ¾ point to close at 71 bid. The 9 7/8% notes due 2024 dropped 3 points to close at 69 bid.

West Texas Intermediate crude oil futures for April delivery fell 20 cents to end the session at $56.96 per barrel.

North Sea Brent crude futures for April delivery ended at $67.07 per barrel, 1 cent worse off.

Delphi jumps

Elsewhere, in the auto space, Delphi’s paper saw a boost, market sources said.

The 5% paper due 2025 added 1¾ points to close at 87 bid.

On Thursday, the London-based auto parts manufacturer showed positive results in its fourth-quarter earnings.

The company reported a profit of $1.06 per share, passing analyst estimates of an 89 cents per share profit.

Intelsat off

Intelsat’s notes slipped off of recent gains, traders said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023, while being pushed under 91, closed the day level at 91 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 dropped ¼ point to close at 83¾ bid.

On Wednesday, the Luxembourg-based satellite operator issued a less than stellar fourth-quarter earnings report.

It reported an 81 cents per share loss, well short of analyst predictions of a 26 cents per share loss.

The market chose to see positivity in the company’s reduction in capital spending and a free cash flow of $88.5 million.

Windstream falls

Elsewhere in telecom, Windstream’s issues spent Thursday falling, market sources said.

The 8 5/8% notes due 2025 shaved off 1 point to close at 89¼ bid. The 9% notes due 2025 lost 3¾ points to close at 49¼ bid.

The Little Rock, Ark.-based rural communications company’s issues continue to underperform this week in reaction to last Friday’s legal ruling against the name.

Aurelius Capital Management sued the company over whether it defaulted on its bonds in 2015, winning a $310 million judgment that the company expects to appeal.

Uniti Group, the Little Rock, Ark.-based communications-focused real estate investment trust and Windstream spinoff, also saw its paper trailing.

The 8¼% paper due 2023 declined by 3¾ points to close at 75¾ bid. The 6% paper due 2023 shed 2¾ points to close at 88½ bid.

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