Denbury notes mixed as new issue prices, ratings upgraded; Rite Aid moves lower on ratings downgrade

By James McCandless

San Antonio, Aug. 14 – Trading in the distressed debt market continued to focus on names with news surrounding them on Tuesday.

Denbury Resources Inc. notes ended mixed as the company brings a $450 million offering to market and receives a ratings upgrade.

Rite Aid Corp. issues fell again as the company received a ratings downgrade in the aftermath of a canceled merger.

Diebold Nixdorf, Inc. paper rose again after Monday’s reports that the company is in the beginning stages of finding a buyer.

Intelsat SA notes gained. Recently, a subsidiary brought a $1.25 billion issue of senior notes to market.

Frontier Communications Corp. issues ended mixed again. Recently, the company released a bad earnings report.

Sanchez Energy Corp. rose. The company fell short of analyst expectations in a recent Q2 earnings report.

Denbury rises

Plano, Texas-based independent oil and gas company Denbury Resources’ notes were mixed, traders said, as the company priced an upsized $450 million issue of 5.5-year senior secured second-lien notes on Tuesday. Prompted by the new issue’s announcement, Moody’s Investors Service upgraded the company’s corporate credit rating and assigned a B3 rating to the new notes. (See related story elsewhere in this issue.)

Also on Tuesday, the company also amended and extended its credit facility to 2021.

The 6 3/8% notes due 2021 rose about 3¼ points to close at around 97 bid. The 5½ notes due 2022 were level at 91 bid.

Rite Aid falls

Camp Hill, Pa.-based retail drugstore chain Rite Aid’s issues fell again, a market source said, after a midday ratings downgrade. Standard & Poor’s lowered its outlook on the company from stable to negative and affirmed the B issuer credit rating. (See related story elsewhere in this issue.)

Last Thursday, reports confirmed that the company had closed the door on a potential merger with grocery store chain Albertsons Co. LLC before letting shareholders vote.

“There are a lot of people on the fence about whether or not they can continue being a standalone company,” a trader said. “Some are hoping for a new merger at some point.”

The 7.7% paper due 2027 lost about 1 point to close at around 77 bid.

On Monday, the 7.7% paper dropped 2 points.

Diebold gains

North Canton, Ohio-based connected commerce solutions company Diebold paper continued to rise, traders said. On Monday, reports confirmed that the company has hired Evercore and Credit Suisse as financial advisers, operating under the expressed goal of finding potential buyers for the troubled firm.

Recently, the company reported a 29 cents per share loss in its Q2 earnings report, falling short of analyst expectations of a 1 cent per share profit.

“They’re getting thrashed by the competition and they’re not financially strong enough to tip that scale back in their favor,” a trader said.

The 8½% paper due 2024 added 1¾ points to close at 72¾ bid.

On Monday, the 8½% paper gained about 17½ points.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes gained. Recently, subsidiary Intelsat Connect Finance SA brought a $1.25 billion offering of senior notes due 2023 to market.

The company reported its Q2 earnings recently, showing a 38 cents per share loss, surpassing analyst estimates of a 37 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 edged up about ¼ point to close at around 97½ bid. The 8 1/8% notes due 2023 rose about ½ point to close at around 89 bid.

On Monday, the 7¾% notes rose about ½ point and the 8 1/8% notes lost about 2½ points.

Norwalk, Conn.-based wireline communications name Frontier Communications issues traded mixed. Last Friday, Standard & Poor’s lowered its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 shaved off about 1½ points to close at around 67 bid. The 10½% notes due 2022 were level at around 90½ bid. The 11% notes due 2025 lost ¼ point to close at 79¾ bid.

On Monday, the 7 5/8% notes about 1¼ points, the 10½% notes fell about ½ point and the 11% notes lost ½ point.

Houston-based independent oil and gas producer Sanchez Energy paper rose. Recently, the company reported a 26 cents per share loss in its Q2 earnings statement, missing the expected 6 cents per share profit. Its oil production numbers failed to meet its own estimates.

The 5¼% paper due 2019 picked up 2¼ points to close at 55½ bid.

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