Freeport McMoRan, Avaya tick higher on company-related news; Ocwen ‘volatile’; Community Health gains

By Colin Hanner

Chicago, April 25 – A handful of distressed notables were driven by some company-specific news on Tuesday, including Freeport McMoRan Inc. after it posted its first quarter results, as well as Avaya Inc., which was active after headlines about the company’s capital structure drove bonds higher.

Still volatile after a lawsuit brought forward by the Consumer Financial Protection Bureau, Ocwen Financial Corp. trickled lower on the session, a trader said. The Atlanta-based residential and commercial mortgage provider has been swinging in the mid- to high-80 range for the past four sessions.

Franklin, Tenn.-based hospital operator Community Health Systems, Inc. stayed as one of the distressed arena’s most active, gaining fractionally on the session.

Aside from a mixed bag of energy-related names – EP Energy Corp., GenOn Energy, Inc. and Transocean Inc., to name a few – trading started to get to the “bottom feeders,” a trader said.

iHeartMedia, Inc. subsidiary, iHeartCommunications, Inc., was down marginally, as was upscale retailer Neiman Marcus Group Inc.

Freeport higher

The gold, silver and copper producer, Freeport McMoRan initially dove lower in the morning session before ticking higher to finish the day, a trader said.

Its 5.45% notes due 2043 were up ½ point to 85 but were down during intraday trading to an 84¼ zip code.

Earnings came in below expectations, yet year-over-year comparisons showed a starkly different picture for Freeport. Its earnings for the most recent quarter were $306 million, compared to a $4.1 billion loss from the same time last year, and revenue was $3.3 million, in line with market expectations.

Its stock was up 87 cents, or 7.11%, to $13.10.

Avaya active

Santa Clara, Calif.-based Avaya was higher on news the “first-lien group keeps getting larger,” a trader said, adding defectors from the crossover groups continue to spill into the first liens.

Its 7% notes due 2019 were up 1 to 1½ points to 83½, a trader said.

Last week, the company filed a reorganization plan that states that holders of the cash flow credit facility secured claims and first-lien notes claims will receive a share of cash proceeds from the syndication of new debt or a share of the new debt if it is not fully syndicated.

Ocwen ‘volatile’

“There’s no recent reason behind the movement, but it’s been volatile the past few sessions,” a trader said of Ocwen Financial’s bond movement.

On Tuesday, its 8 3/8% notes due 2022 were down “almost 2 points” to 86¾, a trader said.

A day prior, Moody's Investors Service said it placed Ocwen's corporate family rating of B3 on review for downgrade, along with its B2 senior secured bank credit facility, Caa1 senior unsecured debt and Caa1 senior secured debt.

The actions follow a cease-and-desist order issued to Ocwen by the North Carolina Commissioner of Banks and a consortium of state mortgage regulators April 20, Moody's said.

The cease-and-desist order stemmed from the findings of a multi-state examination by the state regulators that concluded Ocwen had violated state and federal laws, the agency explained.

On April 20, the Consumer Financial Protection Bureau's announced that it filed suit against Ocwen, alleging widespread servicing errors and violations of federal consumer financial laws, the agency said. The Florida Attorney General also filed a lawsuit against Ocwen.

Health care, pharma higher

For the third-straight session, Community Health ticked higher.

Its 6 1/8% notes due 2022 were up 3/8 point to 83 7/8 on “a bunch of trades,” a trader said. On Monday, the notes were up 1 point, similar to gains seen on Friday.

In pharmaceuticals, Endo International plc’s 6% notes due 2023 were up ¾ point to 88.

In energy

Offshore drilling contractor Transocean’s 6.8% notes due 2038 were unchanged at 79¾ on the heels of its quarterly fleet status report, which reported a backlog of $10.8 billion, according to a news release.

Oil and natural gas producer EP Energy’s 8% notes due 2025 were down 1 1/8 points to 89½.

St. Clairsville, Ohio-based private coal company Murray Energy Corp.’s 11¼% notes due 2021 were down ¼ point to 76¼.

And Houston-based energy company GenOn Energy’s 7¾% notes due 2019 were unchanged at 50.

Distressed movers

Media company iHeartCommunications’ 14% notes due 2021 were down ½ point to 30, a trader said.

Neiman Marcus’ 8% notes due 2021 were down ½ point to 60.

A pair of issues of global shipper Navios Maritime Holdings Inc. were lower on the day.

Its 8 1/8% notes due 2019 were down ½ point to 89½ on a “dozen trades or so,” a trader said.

And its 8 1/8% notes due 2021 were down 3/8 point to 88 5/8.

On Friday, Navios announced it had acquired $113 million of container vessels, according to several media reports.

Press room equipment company Production Resources, Inc. was unchanged in its 8% notes due 2018, which stayed at 76½ from the last time it traded, which a trader remarked was too long ago to remember.

And, Fresh Market Inc.’s 9¾% notes due 2023 were up ½ point to 83¾.

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