GenOn mixed after offering announcement; E&P drops with oil; Community Health reacts to health care bill

By Colin Hanner

Chicago, May 4 – Earnings continued to pour in for companies in the distressed debt market on Thursday, but notable movement was seen in GenOn Energy, Inc. after a proposed offering announcement, as well as exploration and production names after crude oil futures touched lows not seen in months.

The subsidiary of Houston-based energy company, NRG Energy, Inc., GenOn Energy was “quite active,” a market source said, after the company announced it will commence an offering of $540 million of five-year senior secured first-lien notes.

With the news, the company announced the redemption or discharge of one of its outstanding sets of notes, prompting it to surge 20 points higher during intraday trading.

Oil was “getting smacked today,” a trader said, as West Texas Intermediate crude fell below $46 a barrel, a low it hadn’t touched since before the Organization of Petroleum Exporting Countries agreed to curb production in November.

California Resources Corp. was down a few round numbers, nearly dropping below a 70 benchmark, as was Noble International Holdings Inc. and Transocean Ltd.

A revised edition of the American Health Care Act passed the House on Thursday, though hospital groups, like Community Health Systems, Inc. reacted lightly, trading down fractionally on the session.

In the earnings sphere, iHeartMedia, Inc. announced its first quarter results, though its subsidiary iHeartCommunications, Inc. did not react harshly to the disappointing figures.

Frontier Communications Corp. “continued to be softer” post its earnings on Tuesday.

GenOn up on proposed offering

Once it had announced it was offering a new issue of $540 million five-year notes, GenOn Energy bonds were nearly all higher, though its 9 7/8% notes due 2020 were down 5/8 point to 61, a market source said.

The 9½% notes due 2018 were down 1 point to 65½, a trader said. Another trader said they were up 3 points to the same handle.

And its 7 7/8% notes due 2017, which, with net proceeds from the new issue along with cash on hand will be redeemed or discharged, were higher by nearly 20 points in intraday trading to 90 before finishing up 14 points at an 86½ handle, a trader said.

Oil touches new lows

Lost confidence in an OPEC deal to curb the global supply glut of oil seems to be the root of the most recent downfall of crude oil futures, which completely erased gains seen in the past seven months since the deal was reached.

California Resources’ 8% notes due 2022 were down 3 points to 70½, a trader said.

Offshore driller contractor Noble Holdings’ 7¾% notes due 2024 were down 1 point to 89¾.

EP Energy Corp.’s 8% notes due 2025 were down 1½ points to 86½.

Ensco plc’s 5.2% notes due 2025 were down ½ point to 80¼.

Fellow offshore driller Transocean’s 6.80% notes due 2038 were down 1 point to 77¾, though was also impacted by the release of its first quarter figures, which showed EBITDA of $398 million, a 38% year-over-year loss.

Likewise reacting to its earnings was offshore transport services company Hornbeck Offshore Services, Inc., which posted a $27.9 million loss on Wednesday.

On Thursday, its 5% notes due 2021 were down 3 points to 57.

Much ado about healthcare

Another attempt to pass health care legislation came to fruition on Thursday when the House passed the American Health Care Act.

Hospital groups had reacted severely in the past attempts of the bill, though Community Health was rather reserved on Thursday.

Its 6 7/8% notes due 2022 were down ½ point to 87 1/8, as were its 7 1/8% notes due 2020, which finished with a 95¼ handle.

The 6¼% notes due 2023 were unchanged at 103.

In pharmaceuticals, Valeant Pharmaceuticals International, Inc.’s 5 3/8% notes due 2020 were up ¼ point to 88¼.

Communication disconnect

Though iHeartCommunications saw earnings come in on Thursday, its 9% notes due 2021 were down ¾ point to 84½, softer than similar earners on the day.

Yet, earnings have taken a backseat to the exchange offer that is currently on the table, a trader said.

“The exchange offer is driving movement,” the trader said.

Post-earnings, Frontier Communications continues to fall, particularly in its 9% notes due 2031, which were down 1½ points to 84½.

Hexion falls

Columbus, Ohio-based chemical company Hexion, Inc. announced first-quarter results on Thursday, which included net sales of $870 million – a 4% decrease year-over-year – and EBITDA of $95 million, a 22% decrease year-over-year.

Its 9% notes due 2020 were down 3 points to 74¾, a trader said.

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