Community Health mixed as more selloffs expected; Frontier Communications jumps on earnings

By James McCandless

San Antonio, May 2 – Traders reported a standstill day in the distressed debt market on Wednesday, with much of the movement coming from names releasing earnings.

Community Health Systems, Inc. notes were mixed after its chief executive officer stated in an earnings call that more hospital closures were to be expected to further bring down costs.

Frontier Communications Corp. issues jumped as the market reacted positively to its Q1 report released after market close Tuesday.

Intelsat SA paper was mixed as investors shaved off some of the gains made Tuesday in its common stock after posting its Q1 report.

FirstEnergy Solutions Corp. notes were mixed as the company awaits the federal government’s decision of whether or not to provide aid to at-risk power plants. Mallinckrodt plc traded up in the medical space. Jonah Energy LLC paper fell in the energy sector.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems notes were mixed, traders confirmed, after CEO Wayne Smith made it clear to stakeholders on an earnings call Wednesday that the company will continue to sell hospitals as part of its plan to reduce its debt.

“With a reduced portfolio of hospitals we are continuing to proactively manage our corporate costs,” Smith said.

On Tuesday, the company issued its Q1 earnings report, posting a 22 cent loss per share after analysts expected a 26 cent loss. A 21% reduction in operating costs was also seen as a sign of positive movement by analysts.

The 7 1/8% notes due 2020 gained about 1 point to close at around 82¾ bid. The 6 7/8% notes due 2022 lost 1½ points to close at 54½ bid.

On Tuesday, the 7 1/8% notes gained ½ point and the 6 7/8% notes rose 1¼ points.

Frontier climbs

Norwalk, Conn.-based wireline telecom name Frontier Communications issues gained, market sources confirmed, as the market reacted to the company’s Q1 report released after market close Tuesday. The company reported a loss of 58 cents per share, beating estimates of a loss of 83 cents. The company’s revenue of $2.2 billion also beat estimates of $2.19 billion.

The 7 5/8% notes due 2024 jumped up about 5¾ points to close at 70 bid. The 10½% notes due 2022 edged up about 2 points to close at 90½ bid. The 11% notes due 2025 rose 2¾ points to close at 80½ bid.

On Tuesday, the 7 5/8% notes lost 1 ½ points, the 10 ½% gained about ¼ point, and the 11% notes rose 1 point.

Intelsat mixed after gains

Luxembourg-based satellite communications company Intelsat paper was mixed, traders said, after the company posted its Q1 report on Tuesday. The company reported a 56 cents per share loss, worse than what analysts predicted at 41 cents per share. Though the company surprised some by beating $520 million in sales expectations with $543.8 million in sales.

The Intelsat (Luxembourg) SA 7¾% paper due 2021 gained about 2½ points to close at 71 bid. The 8 1/8% paper due 2023 shaved off 1 point to close at 65 bid.

The 7¾% paper rose about ½ point and the 8 1/8% paper gained about 3¾ points on Tuesday.

Volume names trade

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw its notes mixed as the company continues to lobby state and local governments to provide aid to at-risk power plants to ensure their profitability.

The 6.05% notes due 2021 fell about ½ point to close at around 45½ bid. The 6.8% bonds due 2039 dropped ½ point to close at 45½ bid. The 6.85% bonds due 2034 traded up ¼ point to close at 46½ bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 gain about 3½ points to close at around 74½ bid.

Denver-based natural gas producer Jonah Energy’s 7¾% paper due 2025 lost 1¼ points to close at 75¼ bid.

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