Community Health paper among weakest in distressed trading; Zayo bonds jump; Radiate up

By Cristal Cody

Tupelo, Miss., Feb. 23 – While no major headlines dominated the distressed space on Friday, some names stood out.

Community Health Systems Inc. “was the bond down the most,” a trader said.

The company’s paper fell about 1 1/8 points to 2 points on Thursday and declined about 1¼ points to 3 points ahead of the weekend.

Community Health’s 6 1/8% senior secured second-lien notes due 2030 (Caa3/CCC-/CCC-) went out down about 8 points on the week.

Meanwhile, some names traded to the upside.

Zayo Group Holdings, Inc.’s 6 1/8% senior notes due 2028 (Caa2/CCC) climbed over 3 points on Friday and have picked up over 5 points since midweek.

“They’ve been stepping up a good bit,” a trader said.

Also, Radiate Holdco, LLC’s 6½% senior notes due 2028 (Caa3/CCC-) jumped about 4 points over the session.

Market tone was mixed by the day’s end.

The S&P 500 index rose 0.03%, while the Nasdaq declined 0.28%.

The iShares iBoxx High Yield Corporate Bond ETF added 5 cents, or 0.06%, to $77.35.

The CBOE Volatility index dropped over 5% to 13.75.

The benchmark 10-year Treasury note yield fell 6 basis points to 4.26%.

Community Health drops

CHS/Community Health Systems, Inc.’s 6 1/8% senior secured second-lien notes due 2030 went out on Friday off 3 points at around the 61, 62 bid range, a trader said.

The bonds were down about 8 points on the week.

“They have been like 68½ to 69 going into the last week and then yesterday it traded down to 64, 64½,” the trader said. “Nothing big, just small pieces. Then today in small pieces it’s trading at 60 to 61 and some change.”

CHS/Community Health’s 6 7/8% senior secured second-lien notes due 2029 (Caa3/CCC-/CCC-) also dropped nearly 3 points on Friday to around 63 bid, a source said.

Community Health completed $305 million of below-par repurchases of its first- and second-lien notes in December.

In January, Fitch Ratings said it downgraded Community Health Systems and subsidiary CHS/Community Health to CCC+ from B-, reflecting the company’s reduced EBITDA.

Shares (Nasdaq: CYH) in the Franklin, Tenn.-based operator of acute care and outpatient facilities closed Friday 10.98% higher at $2.93.

Zayo higher

Zayo Group’s 6 1/8% senior notes due 2028 traded over 3 points better on Friday at around 75 bid, a source reported.

“For the last month, those bonds have been in the 60s,” the source said.

On Wednesday, the issue stepped up to around 68 bid and then climbed on Thursday to 71¾ bid.

On Friday, the bonds moved higher to 72 bid and then around 75 bid over the session, the source said.

Overall volume was light with $1.9 million reported.

Zayo is a Boulder, Colo.-based privately held communications infrastructure provider.

Radiate moves up

Radiate’s 6½% senior notes due 2028 jumped about 4 points on Friday to the 43, 44½ bid range on no market moving news, a source said.

Trading supply was strong with $8.6 million of reported volume.

The Princeton, N.J.-based private cable and telecommunications holding company known as Astound Broadband is the parent of Grande Communications Networks, LLC and RCN Telecom Services LLC.

Distressed index gains

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Thursday to 0.39% from minus 0.33% on Wednesday and 0.37% on Tuesday.

Month-to-date total returns rose to 1.53% compared to 1.14% on Wednesday and 1.48% on Tuesday.

Year-to-date total return losses narrowed to minus 0.65% versus negative 1.04% midweek and minus 0.71% in Tuesday’s session.

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