FirstEnergy Solutions notes active as it files bankruptcy; Community Health trades amid another asset sale

By James McCandless

San Antonio, April 2 – Traders reported a lagging start to the week in the distressed debt market on Monday as people slowly returned from Easter weekend and investors showed concerns about trade disputes.

FirstEnergy Solutions Corp. notes were active again after it and FirstEnergy Nuclear filed for bankruptcy over the weekend.

Community Health Systems, Inc. saw more activity as it announced Monday that it has completed another hospital sale.

Amid another declining day in oil futures, California Resources Corp. paper led in the distressed energy sector.

Frontier Communications Corp. and Intelsat SA started the week on top of the telecom sector.

Talen Energy and Ensco plc also traded in energy. Revlon, Inc. started the week leading volume in the distressed retail space.

FirstEnergy subsidiaries bankrupt

Over the weekend, two subsidiaries of Akron, Ohio-based electricity producer FirstEnergy filed for bankruptcy, spurring activity in its notes. FirstEnergy Solutions and FirstEnergy Nuclear had appealed to the Department of Energy of Thursday for federal intervention to prevent the closure of certain coal and nuclear-powered plants, claiming that certain plants would need to be shuttered unless energy prices were renegotiated (see related story elsewhere in this issue).

The 6.05% notes due 2021 dropped about 4 points to close at 38½ bid. The 6.8% bonds due 2039 fell 5 points to close at 27½ bid.

Community Health trades again

Franklin, Tenn.-based hospital operator Community Health Systems traded again to start the week as it announced Monday that it had completed the sale of a Florida hospital to subsidiaries of Altamonte Springs, Fla.-based healthcare organization Adventist Health System. Last Tuesday, it announced that an affiliate of the company had signed a definitive agreement to sell three Tennessee hospitals to Jackson, Tenn.-based hospital company West Tennessee Healthcare.

The asset divestitures are part of an ongoing strategy to combat its debt, informing shareholders recently that hospital sales were on the horizon.

The 7 1/8% issues due 2020 shaved off about ¼ point to close just above 82 bid. The 6 7/8% issues due 2022 rose about ¼ point to close at around 58¼ bid.

California Resources active

Los Angeles-based independent oil and gas producer California Resources paper were active as ever as oil futures dropped a few points.

“Those notes continue to be a bellwether,” a trader said. “Energy was really moving and this led the way as usual.”

The 8% paper due 2022 traded up ¼ point to close at 78¼ bid.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications started the week leading the distressed telecom market again, recently announcing that it would be nixing its quarterly dividend in favor of debt service.

The 7 5/8% notes due 2024 rose about ¼ point to close at 62¾ bid. The 10½% notes due 2022 shaved off about ¾ point to close at 83¼ bid. The 11% notes due 2025 fell about 1½ points to close at 74½ bid.

Luxembourg-based satellite communications company Intelsat continued to be another leader in telecom.

The Intelsat Jackson SA 5½% issues due 2023 lost ½ point to close at 80½ bid. The 7¼% issues due 2020 added 8¾ points to close at 92½ bid.

The negative day in oil futures led to movement in other energy names.

Britain-based oil driller Ensco saw its 5¾% bonds due 2044 lose about 1½ points to close at 66¾ bid.

Allentown, Pa.-based independent energy producer Talen Energy’s 6½% paper due 2025 lost about 1 ¾ bid to close at 68 ¼ bid.

New York City-based cosmetics producer Revlon led activity in the retail space.

The 5¾% notes due 2021 fell ½ point to close at 77¼ bid. The 6¼% notes due 2024 lost ¼ point to close at 61½ bid.

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