Community Health notes fall as new offering priced; American Tire tumble continues

By James McCandless

San Antonio, June 28 – Activity ramped up in the distressed debt market on Thursday with news generating increased volume.

Community Health Systems, Inc. notes declined again as the company brings a $1.03 billion offering of senior secured notes to market.

American Tire Distributors issues plummeted over the past few days after Bridgestone announced that it would end a distribution deal for passenger tires.

Murray Energy Corp. paper fell amid reports that the Department of Energy is researching the potential cost of providing financial assistance to at-risk coal and nuclear power plants.

Frontier Communications Corp. notes were mixed. The company announced the impending departure of its chief financial officer last week.

Intelsat SA issues were mixed. The company recently announced a buyback program for its 7¾% notes due 2021

Hexion, Inc. paper was mixed as its bump in volume continued.

Community Health declines

Franklin, Tenn.-based hospital operator Community Health Systems notes fell, traders confirmed, after subsidiary CHS/Community Health Systems, Inc. priced a $1.03 billion offering of 8 5/8% senior secured notes due 2024 after announcing the deal on Wednesday.

“Their distressed stuff really piggybacked off of that new tranche today,” a trader said.

The company announced Tuesday that it had entered into a definitive agreement to sell one of its Oklahoma hospitals to a subsidiary of Oklahoma-city based hospital facilities operator INTEGRIS Health. This sale, expected to close in Q3 2018, is the tenth this year.

The 7 1/8% notes due 2020 lost about 2 ¼ points to close at 88¾ bid. The 6 7/8% notes due 2022 fell about 2 points to close at 51½ bid.

On Wednesday, the 7 1/8% notes lost about 1 point and the 6 7/8% notes declined about ½ point.

American Tire craters

Huntersville, N.C.-based tire distributor American Tire issues have plummeted more than 33 points over the last two days, market sources confirmed, after Bridgestone announced that it would end its passenger tire distribution deal with the company. Earlier this year, Goodyear announced that it would end its distribution deal with the company.

On Thursday, Standard & Poor’s lowered the company’s corporate credit rating and two issue-level ratings (see related story elsewhere in this issue).

“They’ve been taking a beating,” a trader said. “They say they’re going to transition and focus on digital business, but at this point it seems bleak for them.”

The 10¼% notes due 2022 lost about 4 points to close at 22½ bid.

On Wednesday, the 10¼% notes cratered 29¾ points to close at 26½ bid.

Murray Energy off

St. Clairsville, Ohio-based coal producer Murray Energy paper declined, traders confirmed, as reports indicate that the Department of Energy is analyzing the cost of providing federal assistance to at-risk coal and nuclear power plants. Secretary of Energy Rick Perry said that the department is considering multiple options, including mandating grid operators to purchase power from them.

The 11¼% paper due 2021 dropped about 1 point to close at around 60¼ bid.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed. Last week, the company announced the impending resignation of CFO Perley McBride. Recently, an auction for the company’s Florida assets did not generate a satisfactory bid.

The 7 5/8% notes due 2024 were level at 70½ bid. The 10½% notes due 2022 gained about 1½ point to close at 91 bid. The 11% notes due 2025 shaved off 1 point to close at around 80 bid.

On Wednesday, the 7 5/8% notes fell about ¼ point, the 10½% notes lost about 2 points and the 11% notes due 2025 dropped about ½ point.

Also in distressed telecom, Luxembourg-based satellite communications company Intelsat issues were mixed. Recently, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 rose about 1 point to close at around 93 bid. The 8 1/8% notes due 2023 lost about ¼ point to close at around 80¼ bid.

On Wednesday, the 7¾% paper lost about ¼ point and the 8 1/8% notes rose about 4¾ points.

Columbus, Ohio-based chemicals producer Hexion paper saw more heightened activity, ending mixed.

The 6 5/8% paper due 2020 was level at around 94 bid. The 9% notes due 2020 shaved off about ¼ point to close at 85 bid.

“Surprisingly, it was a busy day especially with that new Community Health issue floating around,” a trader said. “But I wouldn’t expect it to sustain as we near the holiday.”

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