Intelsat sinks on continued revenue concerns; L Brands paper tracks higher in trading

By James McCandless

San Antonio, Jan. 30 – Nearing the end of the week in the distressed debt market, more of the focus was fixed on shifting ground in the telecom and retail spaces.

Intelsat SA’s notes continued to dip on concerns of reduced auction revenue despite news of an analyst upgrade.

Sector peer Frontier Communications Corp.’s issues gained ground.

In the retail space, Bed Bath & Beyond Inc.’s paper varied in direction after receiving a ratings downgrade.

Department store name L Brands, Inc.’s notes continued to track higher on Wednesday’s news of a possible executive change and asset sale.

Meanwhile, United States Steel Corp.’s issues saw mixed movements as the market anticipated an after-market earnings report.

Crude oil futures were followed downward by Southwestern Energy Co.’s and Chesapeake Energy Corp.’s paper while Whiting Petroleum Corp.’s notes diverged.

Elsewhere, auto parts company Tenneco Inc.’s issues extended a positive run spurred by news of a revised outlook and continued strategic alternatives review.

Intelsat declines

Intelsat’s notes continued to move lower as the week progressed, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 fell 4 points to close at 37¼ bid. The 9½% senior notes due 2023 shed 3¾ points to close at 49½ bid.

On Wednesday, the 8 1/8% notes crashed 10¼ points.

After the close on Wednesday, news broke that the Federal Communications Commission plans to start laying the groundwork for a c-band spectrum auction in February with the intention of holding it at the end of the year.

As part of the C-Band Alliance, the Luxembourg-based satellite operator has been rebuffed in its continued push for a preferential revenue model.

While the group estimates that as much as $77 billion will be generated from the auction, the FCC and the U.S. Senate are planning to cap payouts to satellite firms at as high as $5 billion between them.

“A lot of paper has been flying around the last few days,” a trader said. We may have reached a floor and it’s tough to say when and if it recoups these losses. I think the revenue thing needs to be solidified.”

Norwalk, Conn.-based wireline name Frontier’s issues gained ground.

The 10½% senior notes due 2022 improved by 1 point to close at 46¼ bid. The 11% senior notes due 2025 gained ¾ point to close at 46 bid.

Bed Bath varies

In the retail space, Bed Bath & Beyond’s long-term paper varied in direction, market sources said.

The 5.165% senior paper due 2044 dipped 2½ points to close at 72 bid. The 4.915% senior notes due 2034 improved by 1½ points to close at 82¾ bid.

During the session on Thursday, the Union, N.J.-based retailer received a ratings downgrade from Moody’s Investors Service.

The agency trimmed the company’s senior unsecured ratings, citing the acceleration of declines in same-store sales and the reduction of EBITDA.

Moody’s also said that as the company works to implement a “transformation,” it is susceptible to loss of market share.

L Brands higher

Department store name L Brands’ notes continued to track higher, traders said.

The 6¾% senior notes due 2036 jumped up 2½ points to close at 98¾ bid. The 5¼% senior paper due 2028 gained ¼ point to close at 99¼ bid.

The Columbus, Ohio-based owner of several retail brands has seen heightened activity over the last few trading days after the news broke on Wednesday that long-time chief executive officer Leslie Wexner is considering leaving his position and selling its Victoria’s Secret brand.

Activist investors have been pushing for a sale for months as the segment consistently reports weaker comparable sales.

Analysts and investors have also called for a spinoff of Bath & Body Works.

U.S. Steel positive

Meanwhile, U.S. Steel’s issues saw mixed movements, market sources said.

The 6¼% senior notes due 2026 picked up 1¾ points to close at 86 bid. The 6 7/8% senior notes due 2025 held level at 90½ bid.

In Thursday trading, the Pittsburgh-based steel products producer’s issues saw heightened attention as the market anticipated its fourth-quarter earnings release.

After the close, the company reported a loss of 64 cents per share, better than the $1.11 loss that analysts had expected.

Revenues were reported at $2.8 billion.

Blaming the seasonality of its mining operations and low first-quarter shipments, the company said that Q1 2020 would be the “trough for the year.”

Oil names down

As oil futures saw a downward trend, distressed energy names followed, traders said.

A mix of fears of the coronavirus’ impact on energy markets and the prospect of an earlier-than-expected OPEC meeting triggered losses in crude futures.

West Texas Intermediate crude oil futures for March delivery were stripped of $1.19 to settle at $52.14 per barrel.

North Sea Brent crude oil futures for March delivery ended at $58.29 per barrel after a $1.52 loss.

Spring, Tex.-based independent oil and gas producer Southwestern Energy’s paper drifted lower.

The 6.2% senior notes due 2025 moved down 2¾ points to close at 84 bid. The 7¾% senior notes due 2027 declined by 1½ points to close at 86 bid.

Oklahoma City-based producer Chesapeake Energy’s notes followed the sector trend.

The 11½% notes due 2025 fell 2½ points to close at 81 bid. The 7% senior notes due 2024 lost 3 points to close at 52 bid.

Denver-based peer Whiting Petroleum’s issues diverged.

The 6¼% senior notes due 2023 slid 4 points to close at 73¼ bid. The 6 5/8% senior notes due 2026 shaved off ¾ point to close at 58½ bid.

Tenneco up

Elsewhere, automotive name Tenneco’s paper extended a positive run, market sources said.

The 5% senior notes due 2026 inched up ¼ point to close at 92 bid.

The Lake Forest, Ill.-based auto parts manufacturer’s paper has seen a three-day run of positive trading after announcing a revised outlook and continued strategic alternatives review on Monday.

The company raised its 2019 revenue outlook to $17.35 billion from $17.25 billion.

Tenneco also announced that it had retained the services of Lazard in its ongoing strategic alternatives review process.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.