Diebold continues fall after ratings downgrade; Mallinckrodt improves after releasing earnings

By James McCandless

San Antonio, Aug. 7 – Earnings reports continued to be the volume focal point of distressed debt trading on Tuesday.

Diebold Nixdorf, Inc. notes declined again after Moody’s issued ratings downgrades based on its recent earnings report.

Mallinckrodt plc issues improved after the company released an earnings report that beat analyst estimations.

Sanchez Energy Corp. paper dropped after the morning release of its Q2 earnings report, falling below expectations.

Intelsat SA notes were mixed. Last Thursday, a subsidiary priced an offering of senior notes for $1.25 billion.

Frontier Communications Corp. notes were mixed again. The company released a weak earnings report last week.

California Resources Corp. paper rose again. Last week, the company posted its Q2 earnings, exceeding analyst expectations.

Diebold down

North Canton, Ohio-based connected commerce solutions company Diebold’s notes fell again, traders said, as the company received ratings downgrades from Moody’s Investors Service. The agency downgraded its corporate family rating, probability of default rating and changed its outlook to negative (see related story elsewhere in this issue).

On Thursday, the company reported a 29 cents per share loss in its Q2 earnings report, falling short of analyst expectations of a 1 cent per share profit.

The 8½% notes due 2024 lost about 3¼ points to close at around 66½ bid.

On Monday, the 8½% notes lost about 11¼ points.

Mallinckrodt better

Staines-upon-Thames, U.K.-based drug maker Mallinckrodt’s issues rose, market sources said, after the company issued its Q2 earnings report Tuesday morning. It listed earnings a $1.78 per share profit, beating analyst expectations of $1.49 per share profit. The company also boasted $631.7 million in revenues above predictions of $621.2 million.

“They’ve had a pretty good year so far,” a trader said. “They’ve managed to establish a better foothold in the American market and it’s paying off.”

The 4¾% notes due 2023 gained 3 points to close at 88¾ bid.

On Monday, the 4¾% notes lost about 2½ points.

Sanchez Energy off

Houston-based independent oil and gas producer Sanchez Energy’s paper declined, traders said, after the company released a worse than expected earnings report Tuesday morning. The company listed a 26 cents per share loss, falling short of the expected 6 cents per share profit. It also reported weaker production numbers of 79,516 barrels of oil equivalent per day, coming in below the company’s guidance range of 80,000-84,000 barrels of oil.

The 6 1/8% paper due 2023 dropped about 6¾ points to close at around 62½ bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes ended mixed again. Last Thursday, subsidiary Intelsat Connect Finance SA priced a $1.25 billion offering of senior notes due 2023. Last Tuesday, the company issued its Q2 earnings report, showing a 38 cents per share loss, beating analyst estimates of a 37 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 shaved off about ¼ point to close at around 96¾ bid. The 8 1/8% notes due 2023 added about ½ point to close at around 88 bid.

On Monday, the 7¾% notes rose about ¼ point and the 8 1/8% notes fell ½ point.

Norwalk, Conn.-based wireline communications name Frontier Communications, another popular name in the distressed telecom sector, also saw issues end mixed.

On Friday, Standard & Poor’s lowered its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

On Tuesday, the company put out its Q2 earnings report, missing analyst estimates of a 72 cents per share loss with an 80 cents per share loss. It reported an $18 million net loss.

The 7 5/8% notes due 2024 fell about ¼ point to close at 67½ bid. The 10½% notes due 2022 gained ½ point to close at 91¾ bid. The 11% notes due 2025 rose ¾ point to close at 82 bid.

On Monday, the 7 5/8% notes lost 1 point, the 10½% notes rose about 1¼ points and the 11% notes were level.

Los Angeles-based independent oil and gas name California Resources paper improved again. The company beat analyst predictions of a 43 cents per shares loss last Thursday by reporting a 29 cents per share loss in its Q2 earnings report.

The 8% paper due 2022 gained ½ point to close at 91½ bid.

On Monday, the 8% paper added 1 point.

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