Noble Group continues to leak after downfall; Intelsat extends offer, off ‘a little bit’; GenOn Energy mixed

By Colin Hanner

Chicago, May 16 – Issues continued to stay firm as a whole in the distressed debt market on Tuesday, and volatility remained as present as it has in the past few sessions, market sources said.

“Everything’s been up today, and this week,” a trader said.

Noble Group Ltd., a physical commodity trader based in Hong Kong, has seen a 40-point downswing since Thursday following the company’s first quarter results. Its bonds ticked lower several points again on Tuesday.

An exchange offer already twice extended for satellite telecommunications company Intelsat SA was again lengthened on Tuesday following low turnout. Its bonds were off “a little bit,” a trader said.

Though rue21 Inc. announced its Chapter 11 bankruptcy on Tuesday – sending the retail default rate even higher for the year – retail companies didn’t seem to notice, though Claire’s Stores Inc. and Neiman Marcus Group Inc. did trade.

Exploration and production names took a backseat on the session as crude oil futures slipped after rallying the past few sessions. In energy, GenOn Energy Inc. were down, flat and higher across three issues.

Valeant Pharmaceuticals International, Inc. was mixed, though active, on the session, as were some other health and pharmaceutical names.

Frontier Communications Corp. was higher on “lots of trades,” feeding into a rally contrary to the downturn the telecommunications company has had since it announced its earnings on May 2, and Hertz Global Holdings Inc. rebounded after sessions of falling caused by disappointing quarterly figures last week.

Noble Group continues leak

After issuing a profit warning on Wednesday and following that with poor first quarter results on Thursday, Noble Group’s bonds have fallen around 40 points from the mid-90s area to the low-50s, a market source said.

Its 6¾% notes due 2020 were down 2 points to 51, a trader said.

Moody’s Investor Service downgraded the issue on Monday, adding that “the company's loss during 1Q 2017 suggests significant uncertainties over an operational turnaround and the high likelihood of debt leverage remaining elevated,” Moody's vice president and senior analyst Gloria Tsuen said in a news release.

Moody’s also suggested Noble would not have enough liquidity to pay for debt due next year.

On Tuesday, Fitch Ratings downgraded Noble’s outstanding senior notes to BB- from BB+.

Intelsat extends offer, again

Intelsat gave another update on its exchange and extended the offer by three more days until 5 p.m. ET on May 18, Prospect News reported.

This is the third time the company has pushed back its exchange offer for several sets of notes from both its Jackson- and Luxembourg-held subsidiaries.

“Its bond traded off a little bit,” a trader said. “There was a disclosure that there are no ongoing talks right now. I guess we’ll see if anything happens in the next couple of days.”

Its Jackson-held 7¼% notes due 2020 were down ½ point to 92¾, and its 5½% notes due 2023 were down 1 7/8 points to 82 5/8.

The 7¼% notes due 2019 were up ¼ point to 96¾.

In health and pharma

The feeling was mixed in the health and pharma sector on Tuesday.

Valeant’s 6 1/8% notes due 2025 were up ½ point to 80¾, a trader said, while its 5 3/8% notes due 2020 were down 1/8 point to 93 3/8.

And its 7½% notes due 2021 were down 3/8 point to 92½.

Concordia International Corp.’s 7% notes due 2023 were down 7/8 point to 23.

And hospital operator Community Health Systems Inc.’s 6 7/8% notes due 2022 were down ¼ point to 88½.

Retail wavers

With rue21 Inc. entering the pool of retailers entering bankruptcy in 2017, the distressed market didn’t seem to pay much attention.

Claire’s 6 1/8% notes due 2020 were up ¾ point to 42½, while its 9% notes due 2019 were up “almost 1” point to 49.

Neiman Marcus’ 8% notes due 2021 were down ½ point to 53, easing from a5/8-point loss on Monday.

“If [rue21’s bankruptcy] surprised anybody, they were stuck under a rock for the past two months,” a market source said.

Distressed wrap-up

Houston-based energy company GenOn Energy’s 8½% notes due 2021 were up ½ point to 86, though its 7 7/8% notes due 2017 were unchanged at 82.

Its 9½% notes due 2018 were down ¼ point to 72.

Frontier Communications’ 11% notes due 2025 were up ½ point to 94¼, a trader said, while its 10½% notes due 2022 were up 3/8 point to 99 1/8.

And Hertz, which had been fizzling the past few session along with other car-rental companies, rallied in its 5½% notes due 2024, which were up 1 1/8 points to 79 1/8.

© 2015 Prospect News.
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