Intelsat notes improve on expansion news; retail names in focus; Diebold moves lower

By James McCandless

San Antonio, Oct. 16 – Tuesday trading in the distressed debt market continued to trend downward as the market shifted its attentions to the upcoming third quarter.

Telecom took the lead as Intelsat SA’s notes jumped on the back of recent announcements on expansions in its business.

Elsewhere in the sector, Digicel Group Ltd.’s issues were mixed after the company extended the deadline for its exchange offers. Wind Tre SpA’s paper was active but ended level.

Retail names were mixed. David’s Bridal Inc.’s notes declined after the company missed an interest payment. Rite Aid. Corp. issues slipped while PetSmart, Inc. and Neiman Marcus Group, Inc. saw improvements in their notes.

As potential third quarter results came into focus, Diebold Nixdorf, Inc. paper declined.

In the chemical space, Hexion Inc.’s notes continued to drop.

Intelsat gains

Intelsat’s notes improved in Tuesday activity, traders said.

The Intelsat (Luxembourg) SA 8 1/8% notes due 2023 rose about 1½ points to close at around 90½ bid. The Intelsat Jackson SA gained about 1 point to close at around 93 bid.

The Luxembourg-based satellite communications name announced two new business segments this week that have increased its market cap by about $500 million, according to a market source.

The company announced Monday a new service that would provide enhanced satellite coverage to high-traffic business jet routes with the intention of eliminating gaps in broadband coverage.

Another announcement highlighted the company’s investment in Africa Mobile Networks with the intention to expand cellular coverage within sub-Saharan Africa.

“It’s given them a pretty good boost,” a trader said. “But it’s probably temporary. They still have mountains of debt to deal with.”

Elsewhere in the telecom space, Digicel’s issues were mixed.

The 8¼% notes due 2020 shaved off about ½ point to close at 74½ bid. The 7 1/8% notes due 2022 added ¼ point to close at 64½ bid.

Late Monday, the Kingston, Jamaica-based mobile phone network provider again extended the early tender date and the simultaneous final deadline for its exchange offers to 11:59 p.m. ET on Nov. 2.

The offers began on Aug. 31 to exchange any all of its outstanding $2 billion 8¼% notes due 2020 and any and all of its outstanding $1 billion 7 1/8% notes due 2022 for new notes to be issued by the company’s subsidiaries, Prospect News reported.

Meanwhile, Milan-based fixed and mobile telecom company Wind Tre saw its 5% paper due 2026, while moving higher by ¼ point in intraday trading, hold firm at around 86½ bid, according to Trace data.

Retail in focus

In retail, David’s Bridal notes declined, market sources said.

The 7¾% notes due 2020 lost about ¼ point to close at around 45 bid.

On Tuesday, the Conshohocken, Pa.-based wedding retailer skipped an interest payment on the 7¾% notes, entering a 30-day grace period on the payment.

Soon after, Standard & Poor’s lowered the company’s issuer credit rating and the issue level rating on the notes.

Sector peer Rite Aid’s 6 1/8% notes due 2023 lost about ¼ point to close at 87 bid. The 7.7% notes due 2027 fell about ½ point to close at around 76½ bid.

On Monday, Moody’s Investors Service downgraded the Camp Hill, Pa.-based drug store chain’s corporate family rating, probability of default rating and the ratings on its senior secured revolving credit facility, senior unsecured guaranteed notes and senior unsecured notes.

On the luxury side, Dallas-based retailer Neiman Marcus’ 8% paper due 2021 added ¼ point to close at 63¾ bid.

“Retail is really interesting right now,” a trader said. “There’s a lot of talk about who’s the next to go down and who’s going to limp on. There’s holiday sales for the brick-and-mortar places to divvy up and a lot of people are trying to determine who’s going to get the lion’s share.”

Diebold down

Diebold’s notes saw a multi-point drop, traders said.

The 8½% notes due 2024 shaved off about 3¼ points to close at around 67 bid.

“We’re about to enter another earnings season,” a trader said. “So they have a lot of eyes on them and whether they’ll rebound from a bad quarter or continue to spiral.”

On Tuesday, the company announced that third-quarter earnings would be reported on Oct. 31.

The North Canton, Ohio-based connected commerce solutions company’s notes fell into distressed territory at the beginning of August after the company reported a 1 cent per share loss and a $1.11 billion drop in revenue in its second-quarter earnings report.

The notes hit a low on Aug. 10 at around 54½ bid, according to a market source.

Hexion moves lower

Hexion’s paper continued a negative trend, market sources said.

The 6 5/8% paper due 2020 lost ½ point to close at 89 bid. The 9% paper due 2020 fell about 3¼ points to close at around 72¼ bid.

On Monday, the 6 5/8% paper traded down about 1¾ points, and the 9% paper dropped about 2¾ points.

The Columbus, Ohio-based chemical producer’s notes garnered increased attention this week on a convergence of negative factors. Traders pointed to the company’s issues as a supplier amid increasing prices with tariffs, overall negativity in the chemical sector, and securities that are nearing maturity.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.