Intelsat notes trade higher after financing news; Oasis Petroleum eyed as ratings cut

By James McCandless

San Antonio, April 8 – Telecom and energy names ruled activity in the distressed debt space during the Wednesday session.

Intelsat SA’s notes moved to a better position after news broke that the company is seeking C-band relocation cost financing.

Sector peer Frontier Communications Corp.’s issues varied.

In the oil and gas space, Oasis Petroleum Inc.’s paper diverged in direction after receiving a ratings downgrade.

As oil futures rose on hopes of a production cut, Occidental Petroleum Corp.’s, Western Midstream Partners, LP’s and Antero Resources Corp.’s notes followed suit.

Meanwhile, propane name Ferrellgas Partners, LP’s issues declined in the run-up to the company pricing a new offering.

Pharmaceuticals producer Mallinckrodt plc’s paper jumped a day after the company announced a reduced private exchange.

Generic drug maker Endo International plc’s notes also received a boost.

Intelsat better

Intelsat’s notes traded higher as the day came to an end, traders said.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 improved by ¾ point to close at 58 bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 picked up 1¾ points to close at 16 bid.

On Wednesday, the Luxembourg-based satellite operator’s structure was pushed higher after news broke that the company is exploring relocation cost financing for the C-band spectrum it plans to sell.

The company has hired PJT Partners and Kirkland to evaluate its balance sheet as it looks for pre-relocation financing for the spectrum it plans to sell in a December Federal Communications Commission auction.

At the same time, groups of bondholders are consulting financial advisers as Intelsat considers a range of options to handle its billions of dollars in debt.

In February, the FCC voted to allot the company a potential $4.85 billion in revenue from the auction despite months of lobbying for an increase.

“They may do some sort of distressed exchange before the auction,” a trader said.

Norwalk, Conn.-based wireline name Frontier’s issues also improved.

The 10½% senior notes due 2022 gained 2¼ points to close at 28½ bid. The 11% senior notes due 2025 held level at 26½ bid.

Oasis diverges

In the oil and gas space, Oasis Petroleum’s paper diverged in direction, a market source said.

The 6 7/8% senior notes due 2022 fell 2 points to close at 14 bid. The 6¼% senior paper due 2026 added ¼ point to close at 12¼ bid.

After the close on Tuesday, the Houston-based independent oil and gas producer received a slate of ratings downgrades from Moody’s Investors Service.

The agency lowered the company’s corporate family rating, probability of default rating, speculative grade liquidity grading and unsecured notes rating.

Moody’s cited cash flow deterioration due to weak commodities prices and increased risk of debt refinancing as it faces a maturity wall in 2022.

The outlook was changed to negative.

Oil gains

Elsewhere, crude oil futures saw a rise as the session closed, traders said.

Positive sentiment in the energy sector ruled as the market hoped for a production cut as a result of an OPEC meeting on Thursday.

West Texas Intermediate crude oil futures for May delivery moved up $1.46 to settle at $25.09 per barrel.

North Sea Brent crude oil futures for June delivery finished at $32.84 per barrel after a 97 cent pickup.

Houston-based producer Occidental Petroleum’s notes followed futures upward.

The 2.9% senior notes due 2024 picked up 2½ points to close at 70 bid. The 2.7% senior notes due 2022 garnered 4¾ points to close at 81½ bid.

The Woodlands, Tex.-based pipeline company Western Midstream’s issues joined the trend.

The 3.1% notes due 2025 picked up 3¾ points to close at 84¼ bid. The 4.05% notes due 2030 was lifted 3¼ points to close at 76½ bid.

Denver-based oil and gas producer Antero Resources’ paper gained ground.

The 5 1/8% senior notes due 2022 improved by 1 point to close at 51½ bid. The 5 5/8% senior notes due 2023 rose 2½ points to close at 45¾ bid.

Ferrellgas declines

Meanwhile, propane name Ferrellgas’ notes saw a decline, market sources said.

The 6¾% senior notes due 2022 shed 2 points to close at 78 bid. The 6¾% senior notes due 2023 lost 1½ points to close at 78 bid.

The Overland Park, Kan.-based propane supplier’s structure saw weakness as the company prepared to price a new offering of senior secured notes.

After the Wednesday close, the company and its wholly owned subsidiary Ferrellgas Finance Corp. priced $575 million of five-year senior secured notes at par to yield 10%, Prospect News reported.

The companies plan to repay all of the outstanding debt under their existing senior secured credit facility with the proceeds from this offering.

Mallinckrodt, Endo rise

Pharma name Mallinckrodt’s issues jumped during the session, traders said.

The 5¾% senior notes due 2022 added 3¾ points to close at 52¼ bid. The 4 7/8% senior notes due 2020 jumped up 13½ points to close at 100½ bid.

The Staines-upon-Thames, U.K.-based drug producer and subsidiaries Mallinckrodt International Finance SA and Mallinckrodt CB LLC announced the start of a private exchange of their $495 million 4 7/8% senior notes due 2020 for new 10% first-lien senior secured notes due 2025 at a rate of $1,000 of new notes for every $1,000 of existing notes exchanged.

Last month, the company had planned to exchange $1.2 billion in debt before market conditions deteriorated.

Dublin-based generics maker Endo’s paper also received a boost.

The 6% senior notes due 2025 tacked on 1¾ points to close at 69¾ bid. The 6% senior paper due 2023 shot up 2¾ points to close at 73¾ bid.

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