Diebold rises as credit agreement amended; FirstEnergy Solutions mixed as plants set to close

By James McCandless

San Antonio, Aug. 30 – Trading in the distressed debt market was active on news-driven names Thursday with the end of the week in sight.

Diebold Nixdorf, Inc.’s notes improved. The company was subject to ratings changes and announced after the market close that it has amended its credit agreement.

FirstEnergy Solutions Corp.’s issues were mixed for a third day as the company announced the coming closure of its last four coal plants by 2022.

Digicel Group Ltd.’s paper saw multi-point gains amid lagging earnings and the departure of its CFO.

Intelsat SA notes rose, eschewing a recent mixed trend. A subsidiary recently priced a $1.25 billion issue of senior notes.

Frontier Communications Corp.’s issues were mixed. A recent earnings report missed analyst expectations and resulted in a ratings downgrade.

Sanchez Energy Corp. paper declined in the energy space.

Diebold up

North Canton, Ohio-based connected commerce solutions company Diebold’s notes improved, traders said, amid developments towards the end of trading or after trading. After the close, the company announced that it has amended its senior secured credit agreement to better the company’s financial position.

The move was preempted by ratings changes. Standard & Poor’s lowered its issuer credit rating and affirmed a negative outlook. Moody’s Investors Service affirmed the company’s corporate family rating, probability of default rating and issue-level ratings. (See related stories elsewhere in this issue.)

On Monday, reports confirmed that the company had secured a $650 million rescue loan from two institutional lenders that JPMorgan Chase & Co. reportedly shopped on its behalf last week.

The 8½% notes due 2024 picked up about ¼ point to close at around 73 bid.

On Wednesday, the 8½% notes rose about 2¼ points.

FirstEnergy Solutions mixed

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw issues mixed for a third day, market sources said. On Thursday the company announced that it would be shutting down its four remaining coal power plants in Ohio and Pennsylvania, citing the inability to compete with natural gas and renewable energy.

On Monday, its parent company finalized a definitive settlement agreement worth $1.1 billion in the Chapter 11 bankruptcy proceedings for FirstEnergy Solutions, FirstEnergy Nuclear Operating Co., and other subsidiaries.

“They’ve been trying to get the government to budge on federal aid for a while,” a trader said. “The jury’s still out on that.”

The 6.05% notes due 2021 rose ½ point to close at 62 bid. The 6.8% bonds due 2039 added ¾ point to close at 62 bid. The 6.85% bonds due 2034 were level at 61¾ bid.

On Wednesday, the 6.05% notes lost ½ point, the 6.8% bonds added ¼ point and the 6.85% bonds gained ¼ point.

Digicel jumps

Bermuda-based mobile phone network provider Digicel paper saw multi-point gains, traders said, amid a tumultuous week marked by a 2% decrease in earnings and a 9% decrease in revenues. Chief financial officer Ray Leclercq also announced his resignation this week.

“The bonds have had a volatile few days,” a trader said.

The 8¼% paper due 2020 rose about 4¼ points to close at 71 bid. The 7 1/8% paper due 2022 gained 4¾ points to close at 62¾ bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes rose. Subsidiary Intelsat Connect Finance SA issued a $1.25 billion offering of senior notes due 2023 recently.

In the company’s second-quarter earnings report, the company showed a 38 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 picked up about 1¼ points to close at 97 bid. The 8 1/8% notes due 2023 edged up about ¼ point to close at around 87¼ bid.

On Wednesday, the 7¾% notes fell about ½ point and the 8 1/8% notes were level.

Norwalk, Conn.-based wireline communications name Frontier Communications issues were mixed.

After a recent negative earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 lost ¼ point to close at 63¾ bid. The 10½% notes due 2022 fell about ½ point to close at around 88½ bid. The 11% notes due 2025 were level at around 78 bid.

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

Houston-based independent oil and gas producer Sanchez Energy paper declined in the energy space.

Recently, the company reported a 38 cents per share loss, falling short of analyst expectations of a 5 cents per share loss.

The 6 1/8% paper due 2023 lost about 1¼ point to close at around 56 bid.

On Wednesday, the 6 1/8% paper rose about 1¼ points.

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