Intelsat notes head lower on 5G dispute; Party City dives after shareholder news

By James McCandless

San Antonio, Nov. 13 – Wednesday in the distressed debt space was marked by negativity in several sectors.

Intelsat SA’s notes shifted lower as a dispute over 5G usage between a consortium of satellite operators and government regulators intensifies.

Sector peer Frontier Communications Corp.’s notes were also under pressure.

Retailer Party City Holdco Inc.’s paper dived after news broke of a share distribution involving its largest shareholder.

Meanwhile, dairy producer Dean Foods Co.’s notes also declined a day after filing for bankruptcy.

Business software name Exela Technologies, Inc.’s issues followed the broad negative trend following its disappointing earnings report.

In the utilities space, PG&E Corp.’s paper gained after the company increased the amount of wildfire victim compensation it was willing to pay out.

Elsewhere, in oil and gas, Chesapeake Energy Corp.’s notes moved upward after Morgan Stanley analysts made positive comments on its debt.

Despite a rise in oil futures, EQM Midstream Partners, LP’s and McDermott International, Inc.’s issues dropped.

Intelsat, Frontier lower

Intelsat’s notes shifted lower during the Wednesday session, traders said.

The 9½% senior notes due 2024 declined by 7¾ points to close at 77¼ bid. The Intelsat (Luxembourg) SA 8 1/8% senior notes due 2023 lost 6¾ points to close at 69¾ bid.

The two tranches combined to see about $227 million trading.

The Luxembourg-based satellite operator’s structure saw weakness amid worries that the U.S. government may decide to hold a public auction for the use of C-band, or 5G.

For months, the company and a group of similar names have been advocating for a private auction as the C-Band Alliance.

Senator Joe Kennedy, R-La., recently said that a private auction centered on three companies in the alliance would not be beneficial to the American public.

An FCC commissioner has also expressed the same sentiment.

“Anything public means less potential revenue for Intelsat,” a trader said. “It looks like they’re losing this fight though.”

Analysts at JPMorgan downgraded the company in reaction to the news.

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

The 10½% senior notes due 2022 fell 1½ points to close at 43 bid. The 11% senior notes due 2025 shaved off ¼ point to close at 43½ bid.

Party City dives

Retailer Party City’s paper declined sharply, market sources said.

The 6 1/8% senior notes due 2023 shed 6 points to close at 58 bid. The 6 5/8% senior notes due 2026 crashed 12¼ points to close at 50¾ bid.

The paper saw a combined $28 million on the tape by the close.

Early Wednesday, the Elmsford, N.Y.-based party supplies retailer disclosed that funds affiliated with its largest shareholder distributed its entire stake.

Thomas H. Lee Partners moved 35.7 million shares to limited partners of its funds, losing the right to make nominations to the board of directors in the process.

Last week, Party City reported weak earnings on lower-than-expected Halloween sales and cut its guidance for the rest of the year.

Dean Foods off

Meanwhile, Dean Foods’ notes were in decline, traders said.

The 6½% senior notes due 2023 dipped ¾ point to close at 19¾ bid.

News broke on Wednesday morning that the Dallas-based bankrupt dairy products producer is in talks for a buyout from Dairy Farmers of America, the nation’s largest dairy cooperative.

“It could take a while because there may have to be some assets to get rid of to settle antitrust stuff,” a trader said.

On Tuesday, the company filed for Chapter 11 bankruptcy on declining demand for dairy products increasing competition for alternative products.

Exela lower

Software name Exela’s issues joined the day’s negative trend, market sources said.

The 10% senior secured notes due 2023 lost ½ point to close at 36½ bid.

After the close on Tuesday, the Irving, Tex.-based business software developer released its third quarter earnings report.

The company showed a loss of 23 cents per share, wider than the 7 cents per share loss that analysts had expected.

Revenues underwhelmed at $372.9 million.

PG&E up

In the utilities space, PG&E’s paper was seen gaining, traders said.

The 6.05% bonds due 2034 tacked on ¼ point to close at 104¼ bid.

This week, the San Francisco-based bankrupt electric utility said it is now offering wildfire victims a total of $13.5 billion, matching what bondholders had been pushing for.

The company had originally offered $8.4 billion, representing one of the main schisms between it and a committee of victims, bondholders and others’ competing reorganization plan.

The move comes after a bankruptcy judge ordered the two sides into mediation to come to a compromise plan and after California governor Gavin Newsom threatened a state takeover of the entity.

Chesapeake better

Elsewhere, in oil and gas, Chesapeake Energy’s notes were seen moving upward, market sources said.

The 7% senior notes due 2024 added 3 points to close at 61¾ bid. The 8% senior notes due 2025 picked up 3¼ points to close at 60¾ bid.

During Wednesday’s session, Morgan Stanley analysts said they expect the Oklahoma City-based independent oil and gas producer to successfully work its way through a potential covenant breach in 2020, though the outcome would have to result from “strategic action and/or waivers.”

After the Tuesday close, the company reported that large shareholder NGP Energy Capital had distributed 310.8 million shares to partners of funds that NGP manages.

Oil in focus

Despite gains for oil futures, distressed energy tranches saw a drop, traders said.

West Texas Intermediate crude oil futures for December delivery added 32 cents to settle at $57.12 per barrel.

North Sea Brent crude oil futures for January delivery finished at $62.37 per barrel after a 31 cent gain.

Canonsburg, Pa.-based sector peer EQM Midstream’s issues took a dip.

The 6½% senior notes due 2048 lost 1¾ points to close at 85¾ bid.

Houston-based oil and gas engineering name McDermott’s paper also went negative.

The 10 5/8% senior notes due 2024 shifted down 1¾ points to close at 7¾ bid.

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