Frontier lower on board appointments; Teva mixed as ratings downgraded

By James McCandless

San Antonio, June 7 – The distressed debt space ended the week with a focus on news in the telecom sector.

Frontier Communications Corp.’s notes moved lower after a slate of board appointments included an expert in restructuring.

Sector peer Intelsat SA’s issues were mixed a day after pricing a new issue.

Meanwhile, Teva Pharmaceutical Industries Ltd.’s paper was also mixed as it received a ratings downgrade.

Another drugmaker, Mallinckrodt plc, saw its notes end Friday better after a few days of scrutiny over its settlement with the U.S. Department of Justice.

A second day of improving oil futures led to similar movements for Ensco Rowan plc’s and Extraction Oil & Gas, Inc.’s issues while California Resources Corp.’s paper finished mixed.

In retail, PetSmart, Inc.’s and L Brands, Inc.’s notes were both positive.

Frontier lower

Frontier’s notes were moving lower in the Friday session, traders said.

The 10½% notes due 2022 dropped 1¼ points to close at 73½ bid. The 11% notes due 2025 shaved off ¼ point to close at 65 bid.

Early Friday, the Norwalk, Conn.-based wireline communications company appointed three new independent board members to its finance committee in order to better evaluate its structure.

The new appointments include people with experience in restructuring and turnarounds.

“That’s usually enough to trigger the downturn that Frontier saw today,” a trader said.

The company also appointed Sheldon Bruha as its permanent chief financial officer after serving in the role on an interim bases since Sept. 2018.

Intelsat mixed

Sector peer Intelsat’s issues were mixed, market sources said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 shed ½ point to close at 89 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 picked up ½ point to close at 73¾ bid.

The Luxembourg-based satellite operator’s subsidiary Intelsat Jackson priced an upsized $400 million add-on to its 9¾% senior notes due July 15, 2025 at par to yield 9.746% on Thursday.

“It’s just an example of how much money is sunk into it,” a trader said.

Teva mixed

Elsewhere, in the pharma sector, Teva’s paper also finished mixed, traders said.

The 3.15% paper due 2026 lost 1 point to close at 78½ bid. The 4.1% paper due 2046 gained ¼ point to close at 68½ bid.

Fitch Ratings issued a downgrade on Friday for the Petach Tikva, Israel-based generic drugmaker.

It downgraded the company’s long-term issuer default rating and affirmed a negative outlook.

The agency cited a litany of cost challenges including a high amount of expected litigation costs.

After a recent $85 million settlement over allegations of exacerbating the opioid epidemic, several analysts weighed in to give their estimate on the financial risks the name faces in potential future litigation.

The scrutiny has put increased pressure on the structure.

“It’s interesting to see this hit different names in the sector at virtually the same time,” a trader said.

Mallinckrodt better

Mallinckrodt, another drugmaker, ended the week with its notes faring better, market sources said.

The 5 5/8% notes due 2023 tacked on ¼ point to close at 71½ bid. The 5¾% notes due 2022 also gained ¼ point to close at 83 bid.

The Staines-upon-Thames, England-based sector peer has seen its own upheaval over legal developments, mainly over the activities of its 2014 acquisition of Questcor.

Despite settling one case over the name, an investigation into its charitable activities is still active.

Oil futures up

Oil futures rose, sending distressed oil tranches on an upward trend, traders said.

London-based contract driller Ensco Rowan’s issues were positive.

The 5.2% notes due 2025 rose 1 point to close at 70½ bid. The 7¾% notes due 2026 added ½ point to close at 75 bid.

Denver-based independent oil and gas producer Extraction Oil & Gas’ paper also rose.

The 5 5/8% paper due 2026 gained 3 points to close at 81¾ bid.

Los Angeles-based producer California Resources’ notes ended mixed.

The 6% notes due 2024 jumped up 3 points to close at 64¾ bid. The 8% notes due 2022 fell ½ point to close at 71½ bid.

West Texas Intermediate crude oil futures for July delivery picked up $1.40 by the close to end at $53.99 per barrel.

North Sea Brent crude oil futures for August delivery finished the session at $63.29 per barrel after a $1.62 rise.

PetSmart, L Brands positive

In retail, PetSmart’s issues spent Friday trading higher, market sources said.

The 8 7/8% notes due 2025 improved by ¼ point to close at 96½ bid. The 5 7/8% notes due 2025 gained ¾ point to close at 95¾ bid.

The Phoenix-based pet supplies retailer is preparing for an initial public offering for its e-commerce segment Chewy.com, which it values at $7 billion.

Elsewhere in the sector, Columbus, Ohio-based peer L Brands’ paper was also better.

The 6¾% paper due 2036 added ¼ point to close at 85¾ bid. The 5¼% paper due 2028 picked up 2¼ points to close at 90¾ bid.

© 2015 Prospect News.
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