Intelsat rises as new issue prices; Mallinckrodt slumps in settlement reaction

By James McCandless

San Antonio, June 6 – As the week headed towards its end, the distressed market was focused on telecom and pharmaceutical names.

Intelsat SA’s notes were rising on Thursday as a subsidiary prepared an offering of six-year senior notes.

Sector peer Frontier Communications Corp.’s issues also improved.

Elsewhere, in the pharma space, Mallinckrodt plc’s paper declined as the market reacts to news of a settlement between it and the U.S. Department of Justice.

Teva Pharmaceutical Industries Ltd., another drugmaker, saw its notes climb.

Auto name Tenneco Inc.’s issues gained despite a Wednesday ratings downgrade.

In energy, California Resources Corp.’s and Chesapeake Energy Corp.’s paper rose with oil futures as Weatherford International plc’s notes moved down.

Meanwhile, in retail, L Brands, Inc.’s issues slid lower a day after starting a tender offer and pricing new notes.

Intelsat, Frontier rise

Intelsat’s notes were rising in the Thursday session, traders said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 picked up ½ point to close at 89½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 rose 1 point to close at 73¼ bid.

On Thursday, Intelsat Jackson, a subsidiary of the Luxembourg-based satellite operator, priced an upsized $400 million add-on to its 9¾% senior notes due July 15, 2025 at par to yield 9.746%, Prospect News reported.

The issue size was increased from $300 million.

“The structure is usually in high demand, so it’s a contributing factor to how it traded today but it may not be a catalyst for how it moves going forward,” a trader said.

The company is in a seemingly continual holding pattern as it waits for the United States government to decide how to handle the use of the C-band spectrum and the profits generated from it.

Norwalk, Conn.-based sector peer Frontier’s issues were also higher.

The 10½% notes due 2022 added ¼ point to close at 74¾ bid. The 11% notes due 2025 tacked on ½ point to close at 65¼ bid.

Mallinckrodt off, Teva up

Elsewhere, in pharmaceuticals, Mallinckrodt’s paper was in decline, market sources said.

The 5¾% paper due 2022 shed 3 points to close at 82¾ bid. The 5 5/8% paper due 2023 was negative by 2¼ points to close at 70¼ bid.

The market is continuing to react to the Staines-upon-Thames, England-based drugmaker’s Wednesday announcement that it came to an agreement in principle with the U.S. Department of Justice to settle an ongoing investigation into its 2014 acquisition of Questcor.

A separate inquiry into Questcor’s charitable activities remains active.

“It’s hard to keep track of all their legal stuff,” a trader said.

The company also recently sued United States health authorities over the calculation of Medicaid rebates.

Petach Tikva, Israel-based generic drug name Teva’s notes took a positive path.

The 3.15% notes due 2026 added ¾ point to close at 79½ bid. The 4.1% notes due 2046 gained 1 point to close at 68¼ bid.

Tenneco gains

Automotive name Tenneco’s issues were seen gaining, traders said.

The 5% notes due 2026 rose ¾ point to close at 77¾ bid.

On Wednesday, Moody’s Investors Service issued a downgrade for the Lake Forest, Ill.-based auto parts manufacturer.

The agency downgraded the company’s corporate family rating, probability of default rating and issue-level ratings.

Moody’s cited the company’s slower than expected debt reduction and diminishing expectations surrounding its near-term financial performance.

Oil trends better

Oil futures trended better, with distressed energy tranches mostly following, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ paper saw a positive trend.

The 8% paper due 2022 added 1½ points to close at 72 bid.

Oklahoma City, Okla.-based sector peer Chesapeake Energy’s notes improved.

The 8% notes due 2027 edged up ¼ point to close at 88½ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s issues took an opposite path.

The 8¼% notes due 2023 fell 2½ points to close at 49 bid. The 9 7/8% notes due 2024 lost 1 point to close at 49 bid.

West Texas Intermediate crude oil futures for July delivery gained 91 cents, closing the session at $52.59 per barrel.

North Sea Brent crude oil futures for August delivery rose to $61.67 per barrel after a $1.04 uptick.

L Brands slides

Meanwhile, in retail, L Brands’ paper was on a downward slope, traders said.

The 6¾% paper due 2036 declined by ½ point to close at 85½ bid. The 5¼% notes due 2028 shaved off 2 points to close at 88½ bid.

On Wednesday, the Columbus, Ohio-based retail chain company commenced cash tender offers for four series of notes.

To fund the tender offer, it priced a $500 million issue of 7½% 10-year senior notes at 98.286 to yield 7¾% after the Wednesday close.

© 2015 Prospect News.
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