Intelsat closes out merger-filled week on decline; Neiman down after Lazard hire; Valeant mixed post-sale

By Colin Hanner

Chicago, March 3 – Trading in the distressed market on Friday saw the end of activity that lasted a full week for satellite telecommunications company Intelsat SA, traders said, as well as a steep decline for a notable distressed retailer that had been posting consistent gains in recent sessions.

New issues in the high-yield space continued to take up a bulk of attention on the session, traders added.

After news broke Monday of a possible merger with OneWeb LLC, which was confirmed on Tuesday morning, Intelsat traded up substantially across its subsidiaries on the week but traders sensed a bit of a slowdown on Friday.

“Everything started to get weaker last night,” a trader said, referring to Intelsat’s overnight prints that carried over into weakened trading on Friday.

Nearly all issues were down, though a trader said most issues rebounded as the afternoon progressed from intraday lows.

Around mid-afternoon, Reuters broke a story surrounding Neiman Marcus Group, Inc., particularly the retailer’s decision to hire Lazard Ltd., an investment bank, to “explore ways to bolster its balance sheet as it seeks relief from $4.9 billion in debt,” the article said.

Neiman bonds reacted poorly to the news, with one of its issues trading down several points, parring gains it had made in the past two weeks.

Canadian pharmaceutical company Valeant Pharmaceuticals International, Inc. traded mixed in two issues, a trader said.

Geoscience company CGG SA was down on one issue after releasing shaky fourth quarter results, media company iHeartCommunications, Inc. continued to see gains on the session, private coal company Murray Energy Corp. was down for the second consecutive session, and several names that have remained active throughout the week were mixed heading into the weekend.

Down, but not forgotten

After merger talk Monday, Intelsat SA remained the most active issues in the distressed arena, but changed its tune on Friday.

“Intel wasn’t nearly as active,” a trader said, adding that several notes were down, particularly in Intelsat Jackson Holdings SA’s issuances.

The 7½% notes due 2021 were down 1 point to 91 7/8, while the 7¼% notes due 2020 were down 1¼ points to 93¾, a trader said.

The 5½% notes due 2023 were down about 1 point to an 85½ to 85¾ zip code, a trader said.

Intelsat Luxembourg Holdings SA was a mixed bag of movement, though the 8 1/8% notes due 2023 saw a ¼-point decline to 55½, a trader said. Another trader said they went out with a 55 handle after being as low as 54¼ during intraday trading.

On the other hand, the similarly held 7¾% notes due 2021 were up 3/8 point to 57 1/8, a trader said, though another trader said they had been as low as 55 during the day.

Intelsat Connect Finance SA’s 12½% notes due 2022 were as “low as 89” but went out closer to 90, nearly unchanged on the session, a trader said.

Neiman feels pressure

With the ever-growing problems surrounding the retail landscape – the seeming unsustainability of brick-and-mortar stores, the convenience and second-nature approachability of online commerce and the rise of behemoth online retailer Amazon, to name a few – Neiman Marcus Group seemed to add its struggles in the traditional retail space.

According to Reuters, Neiman Marcus hired Lazard Ltd. to restructure the company’s debt, though sources said there was no “immediate risk” of bankruptcy.

Creditors did not take to the news well, especially holders of the 8% notes due 2021, which were down 6¼ points to 56¼.

“They were hit hard” on the session, a trader said.

The 8¾% notes were down 4 points to 54.

In pharma

Valeant Pharmaceuticals teetered back-and-forth throughout the week after the company announced its fourth quarter results.

It was more of the same on Friday, the same day the company announced the completed sale of several of its skincare brands to L’Oreal for $1.3 billion in cash, which will be used to repay term loan debt under its senior credit facility, according to a news release.

Its 6 1/8% notes due 2025 were down ¼ point to 79¾, according to one trader, while the 5 3/8% notes due 2020 reversed course and were up 1½ points to 92 1/8.

Concordia International Corp. took a fall in one of its distressed bonds, which seemed to be on the heels of the company’s response to the U.K. Competition and Market Authority’s claim that a competition infringement may have occurred in regards to hydrocortisone tablets in the country between 2013 and 2016, a news release said.

Concordia responded that it does not believe that Amdipharm, the drug in question, was in breach of competition law, though that did little to sway creditors on the session.

The company’s 9½% notes due 2022 were down 4½ points to 40¾.

On little trading, CGG down

The French geoscience company announced its fourth quarter results on Friday, which painted a very dismal picture for the company’s debt in the long-term.

“In this environment and given delays in market recovery, we do not expect our performance to generate sufficient cash flow to service our current level of debt over the years to come,” said Jean-Georges Malcor, chief executive officer of CGG.”

On Feb. 27, the company appointed an ad hoc group for creditor negotiations to guide the restructuring process to reduce debt.

“The proposed debt reduction would involve the conversion of unsecured debt into equity and the extension of the secured debt maturities,” Malcor said.

CGG’s 6 7/8% notes due 2022 were down 1¼ points on one heavy-volume trade to 46 on Friday, a trader said.

Market roundup

Though traders debated whether iHeartCommunications’ 10 5/8% notes due 2023 were up or down on the session – one claimed “wacky” overnight prints skewed the issue’s movement, while another said they were down – they went out the door with an 84¼ handle.

The 14% notes due 2021 were up ½ point to 39¾, a market source said.

And the 11¼% notes due 2021 were “pushing up a little bit” to 84 7/8, a trader said.

St. Clairsville, Ohio-based Murray Energy’s 11¼% notes due 2021 were down 1 point to 80.

Telecommunications company Avaya Inc.’s 7% notes due 2019 were unchanged at 79¾, a market source said.

Exploration and production company California Resources Corp.’s 8% notes due 2022 were up 3/8 point to 85½.

And global shipper Navios Maritime Holdings, Inc.’s 7 3/8% notes due 2022 were down ¼ point to 76, a trader said.

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