Community Health notes decline after ratings shift; PetSmart issues mixed on ratings changes

By James McCandless

San Antonio, June 25 – Volume favorites were the focus for the distressed debt market to start off the week on Monday.

Community Health Systems, Inc. notes declined as the week began after Fitch made changes to its long-term issuer default rating.

PetSmart, Inc. issues were mixed amid ratings changes. The company is in the middle of a dispute with its creditors.

Frontier Communications Corp. paper was down. On Thursday, the company announced the imminent departure of its chief financial officer.

Intelsat SA notes traded down. Recently, the company announced a plan to buy back its 7¾% notes due 2021.

PHI, Inc.’s issues slid. The company recently announced a cash tender offer for its 5¼% notes due 2019.

Mallinckrodt plc paper jumped up in the medical space.

Community Health falls

Franklin, Tenn.-based hospital operator Community Health Systems’ notes declined, traders confirmed, after Fitch downgraded then subsequently upgraded its long-term issuer default rating (see related story elsewhere in this issue).

Last Wednesday, the company announced the final results of exchange offers for three series of notes by its subsidiary CHS/Community Health Systems, Inc. It received valid tenders for $1,770,337,000, labeling the offering oversubscribed.

The 7 1/8% notes due 2020 shed about 6½ points to close at around 85½ bid. The 6 7/8% notes due 2022 lost about ¼ point to close at around 54¾ bid.

On Friday, the 7 1/8% notes rose about 6 points and the 6 7/8% lost ¼ point.

PetSmart mixed

Phoenix-based pet supplies retailer PetSmart issues were mixed, market sources confirmed, after Standard & Poor’s corrected the company’s recovery rating and lowered its issue-level rating on its unsecured notes (see related story elsewhere in this issue).

The company is currently embroiled in a dispute with its creditors after transferring 36.5% of its stake in e-commerce segment Chewy.com to private hands, making less available to bondholders.

The 5 7/8% notes due 2025 lost shaved off about ¼ point to close at 76½ bid. The 8 7/8% notes due 2025 picked up ¼ point to close at 64¼ bid.

Frontier off

Norwalk, Conn.-based wireline name Frontier Communications paper fell, traders confirmed. Last Thursday, the company announced the resignation of CFO R. Perley McBride, who would be leaving the company Aug. 31. McBride has been praised by management for his work in managing the company’s debt, including making improvements to credit agreements and retiring $1.6 billion in debt.

Recently, an auction held for its Florida assets did not produce a satisfactory bid.

“The declines were just normal fluctuation,” a trader said. “Whoever takes the job won’t deviate from what the company wants to do, which is to chip away at its debt and make sure stakeholders are happy with whatever progress is made on that.”

The 7 5/8% paper due 2024 lost about ¾ point to close at around 71¾ bid. The 10½% paper due 2022 dropped about 1¼ points to close at 91½ bid. The 11% paper due 2025 shaved off ¾ point to close at 82 bid.

On Friday, the 7 5/8% notes fell about ¼ point, the 10½% notes gained about ¼ point and the 11% notes lost about 1¼ points.

Volume names trade

Elsewhere in distressed telecom, Luxembourg-based satellite communications company Intelsat saw notes fall, traders confirmed. Recently, the company announced that it would buy back its Intelsat (Luxembourg) SA 7 ¾% senior notes due 2021.

“There’s still a bit of a selloff happening as noteholders look for profits,” a trader said.

The 7¾% notes due 2021 lost about 1¼ points to close at around 91 bid. The 8% notes due 2022 fell about 3 points to close at around 76 bid.

On Friday, the 7¾% notes lost about 2¼ points and the 8% notes gained 2 points.

Lafayette, La.-based offshore energy transportation name PHI’s issues declined. Last Friday, the company announced a cash tender offer to purchase any and all of its $500 million in outstanding 5¼% senior notes due 2019.

The 5¼% notes due 2019 lost about ½ point to close at around 98 bid.

Britain-based drug maker Mallinckrodt continued to trade in the medical space as its 4¾% paper due 2023 lost about ¼ point to close at 84¼ bid.

It was a slow start to the week,” a trader said. “The stuff that is making the equity markets volatile, like tariffs, is not carrying over just yet to our side.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.