Diebold declines again, sees after-market ratings downgrade; Sanchez Energy notes slide, heavily traded

By James McCandless

San Antonio, Aug. 8 – Traders saw an overall increase in activity in the distressed debt market Wednesday as earnings season continued.

Diebold Nixdorf, Inc. notes fell for a third day. After market close, Standard & Poor’s issued a ratings downgrade in the wake of a recent dismal earnings report.

Sanchez Energy Corp. issues slid further. Its recent Q2 earnings report fell short of analyst expectations.

Mallinckrodt plc paper improved again. The company recently released its Q2 earnings report, surpassing analyst predictions.

Intelsat SA notes gained. Last Thursday, a subsidiary priced a $1.25 billion offering of senior notes.

Frontier Communications Corp. issues declined. The company released a lackluster earnings report last week.

Hornbeck Offshore Services, Inc. paper rose. Last week, the company beat earnings and revenue estimates.

Diebold loses

North Canton, Ohio-based connected commerce solutions company Diebold’s notes continued to fall, traders said. After market close Wednesday, the company received another ratings downgrade from S&P. The agency lowered the company’s issuer credit rating and affirmed a negative outlook. (See related story elsewhere in this issue). On Tuesday, Moody’s Investors Service lowered its corporate family rating and probability of default rating.

On Thursday, the company reported a 29 cents per share loss in its Q2 earnings report, missing analyst expectations of a 1 cent per share profit.

“They’re heading for a restructure,” a trader said. “They’re having their lunch eaten by competitors and they’re way overleveraged.”

The 8½% notes due 2024 lost 2¾ points to close at 64½ bid.

On Tuesday, the 8½% notes dropped about 3¼ points.

Sanchez off

Houston-based independent oil and gas producer Sanchez Energy’s issues declined, market sources said. The company reported a 26 cents per share loss in its Q2 earnings statement, falling short of the expected 6 cents per share profit. It also reported weak production numbers of 79,516 barrels of oil equivalent per day, falling short of the company’s guidance range of 80,000-84,000 barrels of oil.

“They’re another restructure candidate,” a trader said. “The notes are just diving right now.”

The 6 1/8% notes due 2023 fell about 2¼ points to close at 60¼ bid.

On Tuesday, the 6 1/8% notes dropped about 6¾ points.

Mallinckrodt gains

Staines-upon-Thames, U.K.-based drug maker Mallinckrodt paper rose again, traders said. In its Q2 report issued Tuesday, the company listed earnings at $1.78 per share profit against analyst expectations of $1.49 per share profit. The company also reported $631.7 million in revenues, beating analyst predictions of $621.2 million.

The 4¾% paper due 2023 picked up about ½ point to close at around 89¼ bid.

On Tuesday, the 4¾% paper gained 3 points.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes improved. Last Thursday, subsidiary Intelsat Connect Finance SA priced a $1.25 billion offering of senior notes due 2023. Last Tuesday, the company released its Q2 earnings report, showing a 38 cents per share loss, surpassing analyst estimates of a 37 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 traded up about ¼ point to close at 97 bid. The 8 1/8% notes due 2023 rose 1 point to close at around 89 bid.

On Tuesday, the 7 ¾% notes lost about ¼ point and the 8 1/8% notes rose about ½ point.

Elsewhere in distressed telecom, Norwalk, Conn.-based wireline communications name Frontier Communications issues declined.

On Friday, Standard & Poor’s lowered its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

On Tuesday, the company issued its Q2 earnings report, missing analyst estimates of a 72 cents per share loss with an 80 cents per share loss. It reported an $18 million net loss.

The 7 5/8% notes due 2024 lost about 1¼ points to close at around 66¼ bid. The 10½% notes due 2022 shaved off about 1¼ points to close at around 90½ bid. The 11% notes due 2025 fell about ¾ point to close at 81¼ bid.

On Tuesday, the 7 5/8% notes fell about ¼ point, the 10½% notes gained ½ point and the 11% notes rose ¾ point.

Covington, La.-based marine transportation name Hornbeck Offshore Services paper gained. Last week, the company released its Q2 report, reporting a 67 cents per share loss versus analyst expectations of a 73 cents per share loss.

The 5% paper due 2021 rose about 2 points to close at 73 bid.

“We’re definitely seeing an uptick in overall activity,” a trader said. “I just hope it sticks after earnings season dies down.”

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