Community Health mixed after exchange extended; J.C. Penney rises a day after Q1 report

By James McCandless

San Antonio, May 18 – Traders reported a slow day in the distressed debt market on Friday, a fitting end to a muted week.

Community Health Systems, Inc. notes were mixed after a subsidiary announced that it would be extending its early payout deadline for three series of notes.

J.C. Penney Co., Inc. bonds rose despite the release on Thursday of a poor Q1 report, which highlighted falling revenues and earnings.

Ultra Petroleum Corp. issues were mixed. The company experienced a ratings downgrade Thursday and released its Q1 report the previous Thursday.

Intelsat SA paper was up. Recently, the company posted a disappointing Q1 report. Frontier Communications Corp., another distressed telecom name, saw notes mixed to close out the week. Mallinckrodt plc issues gained.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems notes were mixed to close the week, traders confirmed, after subsidiary CHS/Community Health Systems, Inc. announced that it would be extending the early payout deadline for three series of notes to 5 p.m. ET on May 22 from 5 p.m. ET on May 17 (see related story elsewhere in this issue).

The company is currently working through a plan to reduce its debt, taking measures to cut costs by holding asset sales and laying off employees.

The 7 1/8% notes due 2020 gained about 1 point to close at around 82 bid. The 6 7/8% notes due 2022 shaved off about ¼ point to close at 53¾ bid.

J.C. Penney gains

Plano, Texas-based department store chain J.C. Penney bonds rose, market sources confirmed. On Thursday, the company released its Q1 report, showing a 4.1% decrease in revenue year-over-year and a 22 cent loss per share, 2 cents short of analyst estimates.

“People are a little worried that they cited bad weather for a portion of their problems,” a trader said. “The numbers were bad already, but now they have to work twice as hard to gain that confidence back.”

The 7.4% bonds due 2037 jumped up about 1¾ points to close at around 65¾ bid.

On Thursday, the 7.4% bonds were level.

Ultra Petroleum mixed

Houston-based independent oil and gas producer Ultra Petroleum issues were mixed, traders confirmed. On Thursday, the company received a ratings downgrade from Standard & Poor’s. The agency lowered its corporate credit rating and affirmed a negative outlook.

Last Thursday, the company’s Q1 report showed a profit of 24 cents per share and a net income of $47.5 million in a reversal of last quarter’s loss.

The 7 1/8% notes due 2025 lost 1 point to close at 64½ bid. The 6 7/8% notes due 2022 gained about ½ point to close at around 69½ bid.

On Thursday, the 7 1/8% notes had gained 2¼ points and the 6 7/8% notes had risen ¼ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat paper traded up to close Friday trading. In a recent Q1 report the company posted a 56 cents per share loss, falling short of analyst predictions of 41 cents per share.

The Intelsat (Luxembourg) SA 7 ¾% paper due 2021 gained about 2 points to close at around 80 bid. The 8 1/8% paper due 2023 rose ¾ point to close at 72½ bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications notes ended mixed. Last week, the company overshot analyst estimates by reporting a Q1 loss of 58 cents per share and $2.20 billion in revenue.

The 7 5/8% notes due 2024 fell 1¼ points to close at 69 bid. The 10½% notes due 2022 rose about 1¾ points to close at around 92¾ bid. The 11% notes due 2025 lost about ½ point to close at around 81 bid.

Britain-based drug maker Mallinckrodt saw its 4¾% issues due 2023 rise about ½ point to close at around 79 bid.

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