Plummeting oil brings California Resources, others down; Community Health, Valeant down; Intelsat up

By Colin Hanner

Chicago, March 8 – The sudden plunge of oil led to the drop of several distressed exploration and production companies on Wednesday, traders said, and several issues active on Tuesday’s session followed up with movement yet again.

The sudden plunge in oil futures – the worst such decrease in more than a year – comes after the U.S. Energy Information Administration said Wednesday that domestic stockpiles increased by 8.2 million barrels last week, a more-than fourfold increase, according to various market analysts’ expectations.

California Resources Corp. and offshore driller Noble Holdings International Ltd. experienced several multi-point decreases on the day in response, traders said, as did several other E&P names.

“Generically speaking, most energy names were down” on the session, a trader said.

Undoubtedly the biggest deal coming out of Tuesday’s high-yield session was Community Health Systems, Inc.’s upsized $2.2 billion of six-year secured notes, though existing senior notes of the Franklin, Tenn.-based hospital group traded off on Wednesday, a trader said.

“Existing notes were down, but the market was heavy in general,” a trader said.

Valeant Pharmaceuticals International, Inc. completed a tender offer on Tuesday for $600 million of its 6¾% senior notes due 2018, and on Wednesday existing notes continued their second consecutive session of losses.

Intelsat SA built on gains across its subsidiaries, especially in Intelsat Luxembourg Holdings SA. After taking a breather Monday, the past two sessions have racked up multi-point sessions for the satellite telecommunications company.

Santa Clara, Calif.-based Avaya Inc. was down slightly on the day, and iHeartCommunications, Inc. followed in the same vein, as new issues in the high-yield space continue to dominate the bulk of attention in the market.

Oil sees huge losses

Intended to cut the glut of oil in the U.S., the Organization of Petroleum Exporting Countries and non-members agreement to cut oil production at the start of 2017 seems to be shedding confidence that such a deal can be carried out effectively.

Figures from the EIA brought down oil future contracts by more than 5% on the day.

The downgrade of confidence stretched to the distressed arena, where wide losses mirrored that of the equity market.

“The oil stuff was really wacky” on the day, a trader said.

California Resources’ 8% notes due 2022 were down 3¾ points to 81¼, a trader said, while another trader said he saw the notes “down a couple of points” to 82.

Noble Holdings’ 6.2% notes due 2040 were down 3¾ points to 72, a market source said, adding that the 7¾% notes due 2024 were down 3½ points to 92.

Fellow offshore driller Transocean Ltd. saw even steeper losses.

Its 7½% notes due 2031 were down 4 points to 85½, a trader said, and the 6.8% notes due 2038 followed with similar losses to a 77 handle.

And Plano, Tex.-based Denbury Resources Inc.’s 6 3/8% notes due 2021 were down 3½ points to 86¾, a market source said.

Community Health off

An upsized deal for Community Health, paired with the blowback of the American Health Care Act, which could have consequences for hospital groups if passed, weighed on the company on the session.

The 6 7/8% notes due 2022 were “really active” and were off ¼ point to 86¼, a trader said.

Another trader said the notes were “about unchanged,” adding that they “looked like it opened lower and managed to climb back up” to an 86 handle.

And the 7 1/8% notes due 2020 were down 1 point to 93¾, a trader said.

Pharma mixed

For the second-consecutive session, Valeant Pharmaceuticals was down, led by the 5 7/8% notes due 2023, which were down 1¼ points to 76½.

The 6 1/8% notes due 2025 were down 1 point 76 1/8, a trader said, while another trader said they were down by the same margin to a 76 handle.

Similar to Community Health, pharmaceutical companies, like Valeant, may be under scrutiny if the American Health Care Act were to pass, emphasized by President Trump’s crusade against high drug prices.

Concordia International Corp. reversed Tuesday’s trend, though, and was up or unchanged in two issues.

The 7% notes due 2023 were up ¼ point to 35¼, a trader said, while the 9½% notes due 2022 were unchanged at 39¾.

Intelsat up yet again

Excluding Monday, Intelsat has put together a week-and-a-half of substantial activity spurred by the announcement of a merger with OneWeb LLC last week.

Intelsat Luxembourg Holdings’ 8 1/8% notes due 2023 were up 2¼ points to 63, a trader said.

For Intelsat Jackson Holdings SA, the 7¼% notes due 2019 were up “about 1 point” to 96¼, while a market source said they were up ¾ point to the same handle.

Distressed wrap-up

Silver, copper and gold producer Freeport-McMoRan Inc. was unchanged in its 5.4% notes due 2034, which remained at 87¾, a trader said.

Flipping directions on the session, Avaya’s 7% notes due 2019 were down 3/8 point to 79½ after a 1/8-point gain on Tuesday.

And iHeartCommunications’ 14% notes due 2021 were down 7/8 point to 38½, a trader said.

© 2015 Prospect News.
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