iHeart notes trade after bankruptcy filing; Community Health active as it hires team to help with debt

By James McCandless

San Antonio, March 16 – Friday trading in the distressed debt market we described as subdued by traders, closing a week of low volume trading.

iHeart Media, Inc. notes continued trading after surprising some traders Thursday by filing for Chapter 11 bankruptcy while reaching a restructuring agreement that would reduce debt.

Issues in Community Health Systems, Inc. stayed active amid reports earlier in the week that the company has hired a few firms to help with its debt problem.

Toys “R” Us, Inc. paper continued to trade after the bankrupt name announced it would be shuttering all U.S. locations after failing to find a buyer during bankruptcy proceedings.

Frontier Communications Corp. and Intelsat SA ended the week as they began it at the top of the distressed telecom space. Mallinckrodt plc added volume to the healthcare space. Revlon, Inc. contributed to the activity in the retail sector.

iHeart trades after filing

After an active week that included two forbearance extensions for failure to pay interest, a restructuring plan that intends to reduce debt by $10 billion and a Chapter 11 bankruptcy filing, traders confirmed that San Antonio-based outdoor communications company iHeart’s notes saw more trading to cap off the week.

“Some people didn’t see this coming,” a trader said. “But it seemed like a matter of time.”

The 7¼% notes due 2027 rose about 1 point to close above 17½ bid. The 2% notes due 2021 fell around 1½ points to close above 12½ bid. The 10 5/8% notes due 2023 dropped 2½ points to close at 78 bid.

Community Health active

Franklin, Tenn.-based hospital operator Community Health Systems saw another week of active issues. Reports confirmed Thursday and Friday that the company has enlisted asset management firm Lazard, Citibank and JPMorgan Chase to help with its debt. The company has already signaled to shareholders that it may have to sell off or close more hospitals over the next year.

“They have hired this group to show that they are serious about turning around what ails them,” a trader said.

The 7 1/8% issues due 2020 rose about ½ point to close around 79½ bid. The 6 7/8% issues due 2022 traded up ¼ point to close at 58¼ bid.

Toys “R” Us trades post shut down news

After beginning proceedings to liquidate all of its assets on Thursday, Wayne, N.J.-based bankrupt toy retailer Toys “R” Us ends the week as one of the most talked of names of the distressed debt market. The company announced that it will also shutter its U.K. locations and that it is still in talks to sell off its Canadian locations along with a share of its top performing U.S. locations.

The 8¾% paper due 2021 lost about 1½ points to close at 3¾ bid. The 7 3/8% notes due 2018 shaved off ¼ point to close at 5 bid.

Volume names end week active

Norwalk, Conn.-based wireline telecom name Frontier Communications has been trading heavily and positively since the recent cancellation of its quarterly dividend.

The 7 5/8% notes due 2024 dropped about ½ point to close above 59½ bid. The 10½% notes due 2022 jumped up about 1½ points to close above 88½ bid. The 11% notes due 2025 fell about ¾ point to close at around 80¾ bid.

Luxembourg-based satellite communications company Intelsat was also a favorite in distressed telecom.

The Intelsat Jackson SA 5½% issues due 2023 traded down about ¼ point to close at around 81½ bid. The 7¼% issues due 2020 lost about ½ point to close at above 59½ bid.

Britain-based drug maker Mallinckrodt has also been taking up much of the distressed healthcare space.

The 4¾% paper due 2023 rose almost 3 points to close just under 82 bid.

New York City-based Revlon has been active since parting ways with CEO Fabian Garcia after poor sales. On Thursday, the company reported more than $355 million in sales for Q4.

The 5¾% notes due 2021 traded up about 2½ points to close at 81 bid. The 6¼% notes due 2024 gained ½ point to close at 66 bid.

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