Intelsat ‘bucking trend’ on lower day; Avaya down following objection; Noble gets back

By Colin Hanner

Chicago, May 17 – Movement was generally lower in the distressed market on Wednesday, marked by political controversy surrounding president Trump that weighed on markets globally, market sources said.

“Bucking the trend of the general market” was Intelsat SA, which was generally higher on the session, a market source said. With an exchange deadline looming – the second pushback in less than a week – investors may be looking toward a possible agreement between noteholders and the company.

Business collaboration and communications services company Avaya Inc. was down several points following an objection by its first-lien debtholders to an exclusivity extension.

“The longer this thing drags out, the worse it could end up being,” a market source said of Avaya’s bankruptcy.

Noble Group Ltd., a physical commodity trader based in Hong Kong, gained a few points after several sessions where its bonds dropped nearly half of their value.

In energy, GenOn Energy Inc. was mixed, though Talen Energy Corp. and California Resources Corp. were down, and rental and car sales company Hertz Global Holdings Inc. was unchanged after a brief rebound on Tuesday.

Intelsat higher ahead of deadline

With yet another deadline approaching for an exchange offer that has already been pushed back several times, Intelsat was higher on the session, one of the few names to gain in a generally downward session.

Intelsat Luxembourg Holdings SA’s 7¾% notes due 2020 were “very active” and ¼ point higher at 53, a trader said. Another market source saw the notes up 1 point at 54.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 were up 1 point to 83½.

On Tuesday, Intelsat extended its exchange offer by three more days until 5 p.m. ET on May 18 from May 15.

The sudden rise may have some implications for how the next day will shape out for bondholders, a market source said.

“I would think if it’s trading up that someone is trying to make the bet that [Intelsat and bondholders] can come to some sort of agreement,” the market source said.

“If people thought the risk was that [bondholders] were going to walk away tomorrow with no agreement of the extension put in place, I would think these things would be heading lower. They wouldn’t be trading up in a down market, which leads you to suggest that talks may be continuing to take place.”

Avaya lower on objections

A protest by creditors may have been the root of Santa Clara, Calif.-based Avaya’s downward movement on the session.

On the day, the 7% notes due 2019 were down 2 points to 82, a trader said.

An informal group of Avaya Inc.’s first-lien debtholders objected to the company’s exclusivity extension motion, arguing that the proposed four-month extension “is more likely to inhibit, rather than promote, development of a confirmable Chapter 11 plan in these cases,” according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The first-lien debtholders said that Avaya knew before filing its current plan that a majority of first-lien creditors would not agree to their proposed treatment, rendering the plan unconfirmable.

However, instead of using their initial exclusive periods to build consensus around a confirmable plan, the debtholders said Avaya “defiantly filed the doomed current plan, which lacks support from any major creditor constituency.”

“I don’t think people are enamored with a longer, drawn-out bankruptcy process,” a market source said of the objection.

Noble stops the bleeding

After four-consecutive sessions of losses, Noble Group was higher on the day Wednesday.

Its 6¾% notes due 2020 were up 3 points to 54.

Noble Group’s bonds have fallen around 40 points from the mid-90s area to the low-50s following poor first quarter results last Thursday.

Energy mixed

Though crude oil futures were higher following figures showing a decrease in week-over-week U.S. crude supplies, it wasn’t enough to lift California Resource.

Its 8% notes due 2022 were down ½ point to 76½.

Elsewhere in energy names, GenOn’s 7 7/8% notes due 2017 were down 1¼ points to 78¾, a market source said.

And its 9½% notes due 2018 were up ½ point to 72½.

Talen Energy’s 6½% notes due 2025 were down ¼ point to 76¼.

Hertz pares gains

Following a brief rally on Tuesday, Hertz bonds corrected to similar movement it had experienced the previous few sessions.

Its 5½% notes due 2024 were unchanged at 79 7/8, while its 6¼% notes due 2022 were down ¼ point to 84½, a market source said.

-Caroline Salls contributed to this review

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