Intelsat gains back losses after exchange offer falls apart; Hertz mixed; E&P names down

By Colin Hanner

Chicago, June 2 – Activity in Friday’s distressed debt session followed up on notable activity from previous sessions to cap a shortened week, with Intelsat SA leading movement of distressed names.

Rebounding off a mostly down Thursday session, Luxembourg-based satellite and telecommunications company Intelsat pared some of its losses with across-the-board gains.

Hertz Corp., which saw an uptick in activity in existing bonds following $1.25 billion issue of five-year second-lien secured notes issued on Wednesday, stayed in the mix.

Oil prices continued to dwindle off persistent suggestion that the Organization of Petroleum Exporting Countries’ cut extension into early next year would do little to stabilize the market.

California Resources Corp., whose movement broadly aligns with day-to-day oil price movement, was down, as were MEG Energy Corp. and Denbury Resources Inc.

Activity stemming from merger activity between offshore drillers Atwood Oceanics Inc. and Ensco plc from Tuesday continued into Friday, though each did not move much, if at all.

Community Health Systems Inc. was unchanged as its stock plunged, and Valeant Pharmaceuticals International Inc. was up fractionally.

Frontier Communications Corp. was one of the day’s most-active issues, global shipper Navios Maritime Holdings Inc. saw one of the biggest drops across any issue, and Neiman Marcus Group, Inc. was higher on little volume.

Intelsat gains

A terminated exchange offer for Intelsat on Thursday caused its bonds to sink, though they were playing a different tune on Friday’s session.

Intelsat Jackson Holdings SA’s 7¼% notes due 2019 were up 4½ points, a trader said, with the 7½% notes due 2021 following with a 1¾-point gain to finish at 92.

And its 5½% notes due 2020 were up ½ point to 95¼.

The exchange offer had been pushed back three separate times since mid-April, as well as amended several times, but it was terminated on Thursday following an extremely low turnout rate.

The exchange offer ended at 11:59 p.m. ET on May 31 after being extended several times amid response rates of less than 1%.

Hertz mixed

Prior to the pricing of Hertz’s new five-year issue on Wednesday, existing bonds were up, and they continued that trend into Thursday.

Though still active on Friday, bonds were mixed.

Hertz’s 7 3/8% notes due 2021 were unchanged at 95.

From there, bonds were one way or the other.

The 5 7/8% notes due 2020 were up ½ point to 95¼, while the 5¼% notes due 2024 were down ¼ point to 79¼.

Oil closes week down

For the second-straight week, oil prices closed lower on Friday than they had at any point in the week leading up to the session on the heightened concern that an OPEC supply cut extension would do little to curb the world supply.

West Texas Intermediate crude settled down lower by nearly 2% to below $48 a barrel, and distressed companies took note.

California Resources’ 8% notes due 2022 were down 1½ points to 74.

Canadian oil sands producer MEG Energy’s 7% notes due 2024 were down ¾ point to 74¾, a market source said.

And Plano, Texas-based Denbury Resources’ 6 3/8% notes due 2021 were down ½ point to 77¼.

Not as affected by the broader market’s moves, Houston-based Atwood Oceanics’ 6½% notes due 2020 were unchanged at 100 5/8, a market source said, following a proposed merger with Ensco.

Ensco’s 5¾% notes due 2044, meanwhile, were down 1/8 point to 71 3/8.

Health care quiet

Franklin, Tenn.-based Community Health saw no movement in its 6 7/8% notes due 2022, which finished at 88½.

Its stock, down 39 cents, or 4.25%, to $8.78, was down along with other health-care names as Republican Sen. Richard Burr said a deal on a health-care bill would not be reached this year, media reports said.

In pharmaceuticals, Valeant’s 6 1/8% notes due 2025 were up ¼ point to 81.

Distressed wrap-up

Frontier Communications remained one of the day’s busiest names, with its 11% notes due 2025 shaving 1/8 point to 93, a market source said.

Navios Maritime’s 7 3/8% notes due 2022 were down 2¾ points to 76¾, though there seemed to be no apparent drivers of the wide

Two retailers, Neiman Marcus and J.C. Penney Co., Inc., traded on Friday.

Neiman Marcus’ 8% notes due 2021 were up 1¼ points to 54½ on one trade, a trader said, while its 8¾% notes due 2021 were up 5/8 point to 51 1/8.

J.C. Penney’s 6 3/8% notes due 2036 were up ¼ point to 73½.

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