Community Health notes stabilize after run of negative trading; Frontier remains active post-Q4 numbers

By James McCandless

San Antonio, March 5 – Low activity in the distressed debt market on Monday was seen by traders as certain names traded on news from last week and few others contributed to the day’s volume.

Notes in Community Health Systems, Inc. started to climb back up on Monday. Notes took a downward turn last week after a Tuesday shareholder call to go over Q4 earnings during which chief executive officer Wayne Smith warned of further hospital closures in 2018.

Frontier Communications Corp. issues were as active as ever, bolstered by last week’s Q4 report and an announcement that it would be rescinding its quarterly dividend.

Mallinckrodt plc paper opened the week active again; the name has been consistently traded since the company completed a $1.2 billion acquisition.

Elsewhere in telecom, notes in Intelsat SA remained a stalwart in trading. Ensco plc and Northern Oil and Gas, Inc. were active as oil futures gained back some of last week’s losses. Revlon, Inc. contributed to the day’s low volume.

Community Health actives

Franklin, Tenn.-based hospital operator Community Health Systems notes were active to start the week, a market source said, almost a week after negative news came out of its Q4 report, the most visible being a $2 billion net loss for the fourth quarter of 2017. CEO Wayne Smith also told stakeholders to prepare for more hospital closures for the year.

The 7 1/8% notes due 2020 rose 1¼ points to close at 81 bid. The 6 7/8% notes due 2022 ticked up slightly to close at 61¾ bid.

Frontier continues activity

Almost a week after issuing its Q4 report and announcing that it would be scrapping its Q4 report, Norwalk, Conn.-based wireline telecom name Frontier Communications saw another active day on the market, a trader said.

“Even though it was a really slow day, Frontier traded a bunch,” the trader said. “On any given day, good or bad, Frontier is going to trade. And that activity could be further sustained now that they finally got rid of that dividend.”

The 7 5/8% notes due 2024 traded up 1 point to close at 61 bid. While heavily traded, the 10½% notes due 2024 remained at the previous day’s close of 84 bid. The 11% notes due 2025 jumped up 2¼ points to close at about 79½ bid.

Mallinckrodt trades

Britain-based drug maker Mallinckrodt’s paper was in high demand, a trader said. After the company completing the $1.2 billion acquisition of Rockville, Md.-based medical applications company Sucampo Pharmaceuticals, its paper has dominated the distressed healthcare space.

The 4¾% paper due 2023 dropped more than ½ point to close just under 79 bid.

Volume favorites active

Notes in Luxembourg-based satellite communications company Intelsat began the week as actively traded as the last week. Trading has taken a positive trend since FCC chairman Ajit Pai made comments about the future of the country’s 5G network that would potentially benefit Intelsat and other satellite names.

The Intelsat Jackson SA 5½% notes due 2023 rose ½ point to close at 84 bid. The 7¼% notes due 2020 rose more than 1 point to close at 94½ bid.

A positive day for oil futures led to few energy names trading actively, save a few.

Britain-based oil and gas driller Ensco’s 5¾% bonds due 2044 traded up slightly to finish above 66¾ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas saw its 8% issues due 2020 jump up 1 point to close at 91 bid.

Since parting ways with CEO Fabian Garcia, New York City-based cosmetics producer Revlon has had its paper actively traded.

The 5¾% paper due 2021 traded up 1 point to close at about 81 bid. The 6¼% paper due 2024 rose about 1½ points to close at 68 bid.

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