Community Health off; energy mixed despite crude surge; Frontier leads telecom retreat

By Paul Deckelman

New York, Dec. 7 – Traders in distressed debt and in the bonds of otherwise underperforming companies and industry sectors said that Thursday’s market, as had been the case on Wednesday, was mostly quiet, with investor attention in the broader high-yield bond world mostly focused on new or recently priced issues.

Among specific names, hospital operator Community Health Systems, Inc.’s paper was seen both busy and getting battered around, although traders had seen no firm news out on the company or the industry.

Peer Tenet Healthcare Corp., though, was not affected.

Energy issues were mixed on the day, even though world crude oil prices were rebounding solidly from Wednesday’s slide. Sector bellwether credit California Resources Corp. was down while such peers as Denbury Resources Inc. and Jones Energy Holdings, LLC were on the upside.

Telecommunications provider Frontier Communications Corp. remained weak as did Windstream Services and Intelsat Luxembourg SA. But Altice NV’s assorted issues gained.

Community Health hit

A trader mentioned that Community Health Systems’ various notes “were down 1½ to 2½ points across their [capital] structure” in fairly active trading.

Another trader saw them hit even harder, estimating that the Franklin, Tenn.-based hospital operator’s most widely traded issue, its 7 1/8% notes due 2020 “was down 3, maybe 4 points from recent levels,” seeing those notes going out around 76 near the end of the day.

At another desk, they were seen closing at 76 5/8 bid, off 2 7/8 points, with over $19 million traded.

The company’s 6 7/8% notes due 2022 meantime lost 1 point on the day, a market source said, ending at 57½ bid, on about the same volume.

There was no fresh news out about the company on Thursday.

But one of the traders suggested that “hospitals may be impacted” by some of the aspects of the tax overhaul bill being hammered out in Congress – and the highly leveraged Community Health is considered one of the weaker names in that industry grouping.

A trader said that Dallas-based sector peer Tenet Healthcare “didn’t really trade much today,” seeing its paper “unchanged on not much volume.”

Tenet’s 6% notes due 2020 closed at 106 bid, up ¼ point on the day.

Energy issues mixed

Oil and gas names were seen mixed on the session, even though world crude oil prices were on the rebound Thursday after having been beaten down on Wednesday.

The sector benchmark issue – Los Angeles-based oil and natural gas exploration and production company California Resources’ 8% notes due 2022 – was seen down more than 1/8 point on the day at just over 76¼ bid on brisk trading of more than $19 million.

At another desk, a trader said the notes dipped by ¾ point on the day.

But the company’s 5½% notes due 2021 were quoted 1 7/8 points better on the day at 81½ bid.

And Plano, Texas-based sector peer Denbury Resources’ 4 5/8% notes due 2023 gained 1 point on the session to end at 67 bid.

Austin, Texas-based Jones Energy’s 9¼% notes due 2023 were up 5/16 point at just over 73 bid.

Those moves came against a backdrop of better crude prices following a Wednesday sell-off sparked by reports indicating an unexpectedly strong buildup of U.S. gasoline supplies, which could curb future crude demand by refiners.

January-delivery West Texas Intermediate crude gained 73 cents per barrel in New York Mercantile Exchange trading, ending at $56.69, recovering at least part of Wednesday’s $1.66 per barrel slide.

Meanwhile, the February North Sea Brent crude contract rebounded by 98 cents per barrel to $61.22 in London futures trading on Thursday, after swooning by $1.64 per barrel on Wednesday.

Frontier falling again

In the telecommunications space, a trader said that it was “more of the same” for Stamford, Conn.-based wireline operator Frontier Communications’ recently beleaguered bonds, seeing its 10½% notes due 2022 off 3/8 point at 79 5/8 bid, with over $12 million having traded.

Its 7 5/8% notes due 2024 went home at 70¼ bid, down ¾ point on the day.

A trader said that Little Rock, Ark.-based sector peer Windstream Services’ 6 3/8% notes due 2023 lost 1 full point, closing at 67 bid, while its 8 5/8% notes due 2025 were likewise 1 point lower at just under 96 bid.

A trader said that Intelsat Luxembourg’s 7¾% notes due 2021 were “a little weaker,” seeing them finish at 53¾ bid.

Another trader observed that the 7¾s “have been sliding for a good number of days” and are now languishing in the low to mid 50s.

However, a trader said the Luxembourg-based satellite company’s other issues, including its Intelsat Jackson Holdings SA notes, were “pretty much sideways today.”

Several of Netherlands-based telecom and cable provider Altice’s issues were higher in Thursday’s trading, with its 7¾% notes due 2022 up nearly ½ point at 98 1/8 bid on over $22 million of activity.

The France-based SFR Group unit’s 7 3/8% notes due 2026 gained 1/8 point, closing at 101¾ bid with around $20 million changing hands.

© 2015 Prospect News.
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