FirstEnergy Solutions up; Frontier gains more after asset sale talk

By James McCandless

San Antonio, April 5 – Traders reported another quiet day in distressed debt trading, as most activity continues to be seen in news-driven names.

FirstEnergy Solutions Corp. notes rose as reports surfaced that it would be deconsolidated from its parent company as a result of its bankruptcy.

Frontier Communications Corp. issues saw more gains after Wednesday reports that the company is searching for buyers of certain assets.

Ultra Petroleum Corp. paper traded down, seeing the brunt of activity in the distressed energy space as oil futures remain volatile.

Elsewhere in distressed energy, Talen Energy Supply LLC’s notes dropped.

Intelsat SA provided more volume in distressed telecom as its notes continued to climb.

Community Health Systems, Inc. issues were active and mixed in the healthcare space.

FirstEnergy rises

Notes from FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp. were back in high volume on Thursday, traders confirmed, as the parent company announced that it and FirstEnergy Nuclear Operating Co. would be deconsolidated from the company due to bankruptcy filings (see related story elsewhere in this issue).

Despite the bankruptcy filing over the weekend, the subsidiaries will continue to seek federal help to keep their troubled coal and nuclear-powered plants open.

The 6.05% notes due 2021 gained about 1 point to close just above 29¾ bid. The 6.8% bonds due 2039 jumped up about 1¾ points to close at 30 bid.

The bonds had been mixed in the previous session, the 6.05% notes losing about ¼ point but the 6.8% bonds rising ½ point.

Frontier gains again

Norwalk, Conn.-based wireline telecom name Frontier Communications made more gains Thursday, according to a market source, after reports confirmed on Wednesday that the company has enlisted the help of financial advisory firm Evercore to find buyers for certain assets in Florida, Texas, Connecticut and California.

This is the company’s latest move to try to reduce its debt. It recently decided to end its quarterly stock dividend to focus on debt repayment.

The 7 5/8% notes due 2024 gained about 1¼ points to close at around 64 bid. The 10½% notes due 2022 rose about ¾ point to close just below 86¾ bid. The 11% notes due 2025 jumped up 1¾ points to close at 77¼ bid.

In trading Wednesday, the 7 5/8% notes had gained about ½ point, the 10½% notes added about 2½ points and the 11% notes moved higher by about ¾ point.

Ultra paper up

As oil futures continued to remain volatile and natural gas supply outages remain, traders reported that Houston-based oil and gas driller Ultra Petroleum paper traded down Thursday.

“It’s a really weak space right now,” a trader said. “And this name is getting a beating because of it.”

The 6 7/8% paper due 2022 shaved off about 2 points to close below 83¼ bid. The 7 1/8% notes due 2025 plummeted 3¼ points to close at 84¾ bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat provided more volume in distressed telecom as notes saw gains.

The Intelsat Jackson Holdings SA 5½% notes due 2023 rose about 1¼ points to close at just above 82¾ bid. The 7¼% notes due 2020 picked up ½ point to close at 95 bid.

Franklin, Tenn.-based hospital operator Community Health Systems issues recovered some of Wednesday’s losses as the company makes several maneuvers to reconcile its debt problem, beginning with recent asset sales.

The 7 1/8% notes due 2020 gained about ½ point to close at 82 bid. The 6 7/8% notes due 2022 rose about ¾ point to close around 57¾ bid.

Allentown, Pa.-based independent power producer Talen Energy saw its 6½% paper due 2025 trade down about 2 points to close at 68 bid.

“It was a quiet day,” a trader said. “Nothing was moving except for things with some news behind it and a few others trailing off of that.”

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