Murray Energy notes down despite ratings upgrade; American Tire issues regain some ground

By James McCandless

San Antonio, July 2 – As the markets edge closer to the Fourth of July holiday, trading in the distressed debt market was limited to volume favorites on Monday.

Murray Energy Corp. notes declined after Standard & Poor’s raised several of the company’s ratings.

American Tire Distributors issues gained again as the company is scrambling to make up for the termination of its Bridgestone passenger tire distribution deal.

Community Health Systems, Inc. paper was mixed. Last week, a subsidiary priced a $1.03 billion offering of 8 5/8% senior secured notes due 2024.

Frontier Communications Corp. notes were mixed. Recently, the company announced the resignation of its chief financial officer.

Intelsat SA issues were mixed. The company recently announced a buyback program for its 7¾% notes due 2021.

PetSmart, Inc. paper gained. The recent impasse between the company and creditors has cast doubts over the company’s finances.

Murray Energy gains

St. Clairsville, Ohio-based coal producer Murray Energy notes declined, traders confirmed, as S&P issues several ratings changes. The agency raised the company’s corporate credit rating and several issue-level ratings (see related story elsewhere in this issue).

Last Thursday, reports indicated that the Department of Energy is considering providing financial assistance to at-risk coal and nuclear power plants. Secretary of Energy Rick Perry has pointed to the possibility of mandating grid operators to purchase power from the plants in question.

The 11¼% notes due 2021 lost about ¼ point to close at around 59 bid.

On Friday, the 11¼% notes fell about 1 point.

American Tire improves

Huntersville, N.C.-based tire distributor American Tire issues saw more modest gains after precipitous declines, market sources confirmed. Last Thursday, Bridgestone announced that it would end its passenger tire distribution deal with the company. Earlier this year, Goodyear ended its distribution deal with the company.

“I know they’re going to try to focus on online sales,” a trader said. “Whatever they do, they’re going to have to do it fast.”

The 10¼% notes due 2022 rose 4½ points to close at 27½ bid.

On Friday, the 10¼% notes gained about ½ point.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems paper was mixed, traders confirmed. Last Thursday, subsidiary CHS/Community Health Systems, Inc. priced a $1.03 billion offering of 8 5/8% senior secured notes due 2024 after announcing the deal on Wednesday.

The company announced Tuesday that it had entered into a definitive agreement to sell one of its Oklahoma hospitals to a subsidiary of Oklahoma-City based hospital facilities operator INTEGRIS Health.

The 7 1/8% paper due 2020 jumped up 1 point to close at around 92 bid. The 6 7/8% paper due 2022 lost about 3¾ points to close at 48½ bid.

On Friday, the 7 1/8% paper rose about 2¼ points and the 6 7/8% paper gained about ¾ point.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed. Recently, the company announced the coming resignation of CFO Perley McBride.

The 7 5/8% notes due 2024 dropped about 1 point to close at 68¾ bid. The 10½% notes due 2022 rose about ¼ point to close at around 91 bid. The 11% notes due 2025 shaved off about ¾ point to close at around 79¼ bid.

On Friday, the 7 5/8% notes lost about ¾ point, the 10½% notes dipped about ¼ point, and the 11% notes were level at around 80 bid.

Luxembourg-based satellite communications company Intelsat issues were also mixed in the distressed telecom space. Recently, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 lost about 2½ points to close at around 92½ bid. The 8 1/8% notes due 2023 gained ¼ point to close at 81 bid.

Phoenix-based pet supplies retailer PetSmart paper gained. Last Wednesday, the company filed a lawsuit against loan agent Citigroup for allegedly breaching contract by not cooperating with a recent equity transfer of 36.5% of e-commerce segment Chewy.com. The move is the latest in an escalating dispute between the company and its creditors.

The 5 7/8% paper due 2025 traded up about ¼ point to close at around 77¼ bid. The 8 7/8% paper due 2025 rose ¼ point to close at 66½ bid.

“Trading levels were really down today,” a trader said. “You’re going to see even less tomorrow and for the rest of the week.”

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