Intelsat notes improve after filing auction plan; J.C. Penney higher on mixed earnings

By James McCandless

San Antonio, Nov. 15 – The distressed debt space finished the week with more attention paid to newsmakers in the telecom and retail sectors.

Intelsat SA’s notes gained after the company filed a plan to contribute a portion of proceeds from a private C-band auction to the Treasury.

Sector peer Frontier Communications Corp.’s issues diverged.

Elsewhere, retailer J.C. Penney Co., Inc.’s paper moved higher after reporting mixed results for the third quarter.

Party supplies name Party City Holdco Inc.’s notes rose despite receiving a ratings downgrade in reaction to recent events.

Meanwhile, in pharma, Teva Pharmaceutical Industries Ltd.’s issues improved as the company shops a two-part-offering.

Generic drug maker Mallinckrodt plc’s paper was mixed in trading.

A strong day for oil futures was followed by Oceaneering International, Inc.’s notes as Whiting Petroleum Corp.’s issues saw mixed activity and McDermott International, Inc.’s paper slid.

Intelsat gains

Intelsat’s notes gained at the tail end of the week, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose 6½ points to close at 70¾ bid. The 9½% senior notes due 2023 picked up 5¾ points to close at 81½ bid.

Early Friday, the Luxembourg-based satellite operator, as part of the C-Band Alliance, filed a C-band spectrum auction plan with the Federal Communications Commission that proposes contributing a portion of the proceeds from a private auction to the U.S. Treasury.

The move comes after a week of scrutiny on the structure as U.S. government officials express skepticism over a private auction, instead calling for a public alternative.

As part of the proposal, the three companies in the alliance would pay out at least 30% of the proceeds stemming from the auction.

“I think some people might change their minds on this,” a trader said. “But questions about unfair advantages could come up.”

Norwalk, Conn.-based wireline telecom Frontier’s issues were flat to higher.

The 10½% senior notes due 2022 held level at 44 bid. The 11% senior notes due 2025 picked up ½ point to close at 43 bid.

J.C. Penney higher

Elsewhere, in the retail space, J.C. Penney’s paper moved higher, market sources said.

The 7.4% senior paper due 2037 jumped up 6 points to close at 39 bid. The 6 3/8% senior notes due 2036 garnered 5½ points to close at 38 bid.

As the market opened on Friday, the Plano, Tex.-based department store chain reported mixed earnings results for the third quarter.

The company showed a loss of 30 cents per share, narrower than the 55 cents per share that analysts had expected.

Revenues fell short of expectations at $2.5 billion.

The company raised its profit forecast as chief executive officer Jill Soltau said on an earnings call that the company’s turnaround strategy is working.

“I think we will be able to get a better picture of where retailers are at once we see the results from the holiday shopping season,” a trader said.

Party City up

Party City, another retailer, saw its notes rise, traders said.

The 6 1/8% senior notes due 2023 shot up 4 points to close at 75½ bid. The 6 5/8% senior notes due 2026 improved by 1½ points to close at 66 bid.

During the Friday session, S&P Global Ratings issued downgrades for the Elmsford, N.Y.-based party supplies retailer.

The agency lowered the company’s overall rating to B from B+ and cut the ratings on its term loan and senior notes.

S&P said that the downgrades were a reaction to the company’s “meaningful underperformance in the most recent third quarter” versus prevailing expectations.

It also noted that the company is in a weakened competitive position going forward.

This week, its largest shareholder distributed its entire equity stake to limited partners of its funds.

Teva improves

Meanwhile, in the pharma sector, Teva’s issues improved, market sources said.

The 6.15% senior notes due 2036 gained ½ point to close at 88 bid. The 2.8% senior notes due 2028 tacked on 2½ points to close at 92½ bid.

The gains come as the Petah Tikva, Israel-based drug maker shops a new offering.

On Wednesday, the company set initial price talk in its $1.5 billion equivalent two-part offering of non-callable notes due January 2025, coming in dollar- and euro-denominated tranches, Prospect News reported.

The dollar-denominated notes are talked in the high 7% area while the euro-denominated notes are talked in the mid-to-high 6% area.

Also this week, analysts at JPMorgan upgraded the company, going “fairly bearish” on the company in the long-term.

Staines-upon-Thames, England-based peer Mallinckrodt’s paper varied.

The 5½% senior notes due 2025 shed 1½ points to close at 23½ bid. The 5 5/8% senior paper due 2023 added 1¼ points to close at 24¼ bid.

Oil sector mixed

As oil futures moved higher, distressed energy names saw mixed activity, traders said.

West Texas Intermediate crude oil futures for December delivery improved by 95 cents to end the week at $57.72 per barrel.

North Sea Brent crude oil futures for January delivery finished at $63.30 per barrel after a $1.02 boost.

Houston-based offshore engineering company Oceaneering International’s notes followed futures upward.

The 4.65% senior notes due 2024 rose ½ point to close at 88½ bid. The 6% senior notes due 2028 picked up 2 points to close at 88¼ bid.

Denver-based independent oil and gas producer Whiting Petroleum’s issues ended mixed.

The 6¼% senior notes due 2023 closed level at 74½ bid. The 6 5/8% senior notes due 2026 dipped 1 point to close at 63¼ bid.

Houston-based peer McDermott’s paper was under water.

The 10 5/8% senior notes due 2024 shaved off ½ point to close at 6¾ bid.

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