Community Health trades higher for third straight session; Intelsat up; Ultra Petroleum down on results

By Colin Hanner

Chicago, Feb. 22 – Company earnings continued to be the catalyst behind the movement, both good and bad, in the distressed market on Wednesday, traders said, especially two companies that continued to climb and one exploration and production company that dropped after announcing poor fourth quarter earnings.

Hospital operator Community Health Systems, Inc. slowed down in comparison to Tuesday’s session but continued to gain across the board in its distressed bonds after the company announced positive quarterly results after the long weekend.

Seeing a similar trend were satellite telecommunications company Intelsat SA’s Jackson- and Luxembourg-linked bonds, which a trader said continued to move up in anticipation of the company’s earnings.

Those are expected to be released next week.

Bucking the winning trend were a series of Ultra Petroleum Corp.’s distressed notes, which were “down a bunch,” a trader said, after the E&P company announced a loss in the fourth quarter.

Avaya Inc. “keeps leaking,” as one trader put it, and was down marginally in one of its distressed bonds, iHeartCommunications, Inc. was up slightly to finish the session in a bond that was unchanged on Tuesday, and a few other idiosyncratic issues traded tight on the session.

Community Health gains go on

Wednesday marked the third straight session of gains for Franklin, Tenn.-based Community Health Systems, two sessions after the company announced a major asset sale and a day following solid earnings.

“[Community Health] continued to be probably the most active,” a trader said.

The 6 7/8% notes due 2022 were up almost 3 points to 86½, a market source said, and a trader said he had seen them trading as high as 87.

The 7 1/8% notes due 2020 were up 2½ points to 93¾, a market source said.

And two other issues traded around a 98 handle on the session, sources said, including the 8% notes due 2019, which were up 1½ points to 98½, and the 5 1/8% notes due 2021, which were up 1 point to 98¼.

Intelsat stays strong

Though earnings have yet to be released for Intelsat, issues are traded on volume and, as of the past few sessions, have been trading considerably higher.

According to market estimates, Intelsat is expected to announce its earnings next Tuesday.

Kicking off the gainers were Intelsat Jackson Holdings SA’s 7½% notes due 2021, which were up 1¼ points to 83½, a market source said.

The 7¼% notes due 2020 were trading as high as 85¾ to 86, a ¼- to ½-point increase, a market source said, but they went out the door with an 85 1/8 handle.

And the 7¼% notes due 2019 held the same 90 handle as a day prior.

In Intelsat Luxembourg Holdings SA, the 8 1/8% notes due 2023 were up 4 points to 43½ during intraday trading, though a trader said he saw them “going out a bit lower than that.”

And Intelsat Connect Finance SA’s 12½% notes due 2022 went as high as 74, a trader said, though they went out “probably about a point off the top” to a 73 handle, a slight increase on the day.

Ultra low

One issue was down over 10 points on the session for Ultra Petroleum on the day the company announced its fourth quarter results.

A trader said the 5¾% notes due 2018 were down “into the high 80s” to end the session after trading in the mid-90s during the day and up around par a day prior.

“That one got pretty beat up today,” the trader said.

Another trader said the same issue was down several points from par to 93½ but said he did not see the issue drift into the 80s.

According to the company’s earnings report, Ultra Petroleum lost $34.4 million in the fourth quarter.

The Houston-based E&P company filed for Chapter 11 bankruptcy protection last April and has recently filed a plan of reorganization and its disclosure statement, which was approved Feb. 13.

A hearing to consider confirmation of the plan is set for March 14.

In a call to investors on Wednesday, Michael Watford, president and chief executive officer of Ultra Petroleum, offered a timeline for emergence, which he expects during the springtime.

We’re focused on finishing our restructuring process and believe we have a clear path forward,” Watford said, according to a transcript of the call. “We have equity and debt capital committed and a plan approved by the court for voting. We hope to emerge in the late March, early April timeframe and get back to a growth mode.”

All in a bunch

Telecommunications company Avaya’s 7% notes due 2019 finished at 78¼, a trader said, down fractions of a point from where it started.

iHeartCommunications continued to trade on high volume but did not move much from where it started.

The 14% notes due 2021 were up 1/8 point to 40 1/8, a market source said.

Alliance One International, Inc.’s 9 7/8% notes due 2021 were up ¼ point to 87, a market source said.

And Resolute Forest Products, Inc.’s 5 7/8% notes due 2023 were down ¼ point to 86¾.

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