Digicel mixed on exchange offer, ratings downgrades; Diebold declines after credit agreement amended

By James McCandless

San Antonio, Aug. 31 – The distressed debt market saw a flurry of activity centered on topical names as the week came to a close on Friday.

Digicel Group Ltd.’s notes were mixed after a morning announcement of an exchange offer followed by ratings downgrades in the afternoon.

Diebold Nixdorf, Inc.’s issues fell slightly in reaction to news late Thursday that the company had amended its credit agreement.

Sanchez Energy Corp.’s paper improved after a tumultuous week riding a cyclical wave of oil news.

Intelsat SA’s notes fell, ending a week of volatility. Recently, a subsidiary priced a $1.25 billion issue of senior notes.

Frontier Communications Corp.’s issues ended mixed. A recent earnings report disappointed analysts and resulted in a ratings downgrade.

Mallinckrodt plc paper improved in the medical space.

Digicel mixed

Bermuda-based mobile phone network provider Digicel’s notes closed mixed, traders said, after the company announced an exchange offer early Friday. It will offer to exchange any all of its outstanding $2 billion 8¼% notes due 2020 and any and all of its outstanding $1 billion 7 1/8% notes due 2022 for new notes to be issued by its subsidiaries.

The move prompted ratings downgrades Friday afternoon. Moody’s Investors Service lowered the company’s corporate family rating and issue-level ratings. Fitch Ratings downgraded the long-term issuer default rating of the company and its subsidiaries and affirmed a negative outlook. (See related stories elsewhere in this issue.)

“In terms of volume, attention has been turning to them in recent days,” a trader said. “They put out bad earnings and their CFO just left. By all accounts, they’ve had a volatile week.”

The 8¼% notes due 2020 rose about 3¼ points to close at around 75¼ bid. The 7 1/8% notes due 2022 lost ¼ point to close at 62¾ bid.

On Thursday, the 8¼% notes rose about 4¼ points and the 7 1/8% notes gained 4¾ points.

Diebold off

North Canton, Ohio-based connected commerce solutions company Diebold’S issues declined, market sources said. After the close Thursday, the company announced that it has amended its senior secured credit agreement as part of its strategy to strengthen its financial position.

Also on Thursday, Standard & Poor’s lowered its issuer credit rating and affirmed a negative outlook. Moody’s Investors Service affirmed the company’s corporate family rating, probability of default rating and issue-level ratings.

Reports confirmed Monday that the company had received a $650 million rescue loan from two institutional lenders with assistance from JPMorgan Chase & Co., which shopped the loan last week.

The 8½% notes due 2024 lost about ½ point to close at around 72½ bid.

On Thursday, the 8½% notes added about ¼ point.

Sanchez Energy up

Houston-based independent oil and gas producer Sanchez Energy paper ended the week climbing in the distressed energy sector, traders said. Recently, the company reported a 38 cents per share loss, missing analyst estimates of a 5 cents per share loss.

The 6 1/8% paper due 2023 gained about ¾ point to close at around 56¾ bid.

On Thursday, the 6 1/8% paper lost about 1¼ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes dropped at the end of the week. Recently, subsidiary Intelsat Connect Finance SA issued $1.25 billion of senior notes due 2023.

In its second-quarter earnings report, the company showed a 38 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 lost about ¾ point to close at around 96¼ bid. The 8 1/8% notes due 2023 lost about 1 point to close at 86¼ bid.

On Thursday, the 7¾% notes picked up about 1¼ points and the 8 1/8% notes added about ¼ point.

Norwalk, Conn.-based wireline communications name Frontier Communications issues were mixed again to close the week.

In response to a recent negative earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 were level at around 63¾ bid. The 10½% notes due 2022 fell about 1 point to close at 87½ bid. The 11% notes due 2025 shaved off about 1 point to close at 77 bid.

On Thursday, the 7 5/8% notes lost ¼ point, the 10½% notes fell about ½ point and the 11% notes were level.

Staines-upon-Thames, U.K.-based drug maker Mallinckrodt’s paper improved. The company recently reported earnings at $1.78 per share profit, above the expected $1.49 per share profit.

The 4¾% notes due 2023 added about ¾ point to close at around 87¼ bid.

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