Revlon active as company announces CEO departure; telecom and energy names dominate low volume day

By James McCandless

San Antonio, Jan. 30 – While trading volume in the distressed debt market remained relatively low, traders said that the usual drivers provided most of the day’s activity while last week’s activity continued to be repeated.

Notes in Revlon, Inc. traded higher on yesterday’s news that its chief executive officer, Fabian Garcia, would be stepping down from the position after what market sources described as a poor tenure.

The day also marked the usual activity with Frontier Communications Corp and Intelsat SA, remaining some of the most actively traded distressed names.

As oil futures lost some gains from last week, energy companies such as EP Energy, Denbury Resources, Inc. and California Resources Corp. saw the brunt of the activity.

Volume in the healthcare space continued to be occupied by hospital operator Community Health Systems, Inc.

Revlon chief steps down as losses increase

Notes in the New York City-based cosmetics producer Revlon kept climbing on Monday’s news that CEO Fabian Garcia would be leaving the company after a two-year tenure mired in steep losses for the company, which are expected to increase over time, according to market sources. The company’s estimates for the previous quarter show a potential loss of $60 to $80 million, with a projected $165 to $185 million loss for 2017.

“Revlon was probably the most active distressed name,” a trader said. “There was a thought that they would go the route of J. Crew in terms of a potential asset transfer.”

The 5¾% issues due 2021 rose 1½ points to close at 76 bid. The 6¼% issues due 2024 did the same thing to end at 63 bid from Monday’s 61.5 close.

Telecom names fill the day’s volume

Frontier Communications notes trended downward on the day, practically reversing much of last week’s rally as the Norwalk, Conn.-based wireline telecom company settles down from last week’s positive gains after amending its credit agreements for more flexible debt service, a trader said. The 7 5/8% bonds due 2024 returned to Friday’s levels to close at 67 bid. The 10½% notes due 2022 dropped off about ¼ point to close at 83 bid. The 11% notes due 2025 fell 1½ point to close at 78½ bid.

Luxembourg-based satellite communications company Intelsat accounted for much of the day’s volume. The Intelsat Jackson SA 7¼% issues due 2020 inched upward to close above 87½ bid. Intelsat (Luxembourg) SA’s 8 1/8% issues due 2023 erased Monday’s gain to end at 42 bid as the 7¾% issues due 2021 climbed again to finish just below 46½ bid.

Oil futures activity drives energy trading

A slight downturn in oil futures sparked activity in distressed energy names Tuesday, according to a trader. Leading the sector was Houston-based oil and gas name EP Energy. Its 7¾% bonds due 2022 dropped almost 4 points to close at 73 bid. The 6 3/8% bonds due 2023 fell off ¾ of a point to close at 67 bid.

Plano, Texas based oil recovery company Denbury Resources continued to act as a bellwether for the sector. The 6 3/8% notes due 2021 rose to end at just over 84¾ bid. The 5½% notes due 2022 dropped almost 2 points to close near 77 bid.

Continuing to be a mainstay in the energy space, Los Angeles-based oil and gas firm California Resources’ bonds were actively traded. The 6% notes due 2024 dropped again to close at around 74¼ bid. The 8% notes due 2022 lost almost 3 points to close below 84 bid.

Healthcare issues remain active

Franklin, Tenn.-based hospital operator Community Health Systems remained in high volume off of last week’s news that the Blackrock investment firm increased its ownership share to 13%, a trader said. The 7 1/8% notes due 2020 gained slightly to close near 86½ bid as the 6 7/8% notes due 2022 fell almost 1 point to close at 70 bid.

“It was pretty slow,” a trader said. “There was not a lot going on in the distressed market today as a lot of people focused on the new issue calendar.”

© 2015 Prospect News.
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