FirstEnergy Solutions notes regain some losses after bankruptcy filing; Community Health issues down

By James McCandless

San Antonio, April 3 – The week continued at a snail’s pace in the distressed debt market as traders reported low activity as people continued to trickle back in from the long weekend.

FirstEnergy Solutions Corp. notes recovered slightly after bankruptcy news caused multipoint losses.

Community Health Systems, Inc. issues trended down again Tuesday as the company works its way through its divestiture plan.

Remington Outdoor Co., Inc. paper saw a slight bump as the company seeks to delay settlement of a class-action lawsuit until bankruptcy proceedings conclude.

Frontier Communications Corp. notes remained mixed atop the distressed telecom space. Intelsat SA, another telecom favorite, saw issues trade higher. Mallinckrodt plc paper rose as it returned to high volume in the healthcare sector. Revlon, Inc. notes were mixed, leading activity in the distressed retail space.

FirstEnergy slightly up

Traders confirmed that for the second day, notes in FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., were in high volume after it and FirstEnergy Nuclear filed for bankruptcy over the weekend. Reports confirmed that the company would continue to appeal to the Department of Energy for federal intervention against the closure of certain coal and nuclear-powered plants.

“Those subsidiary notes have been moving a bit,” a trader said.

The 6.05% notes due 2021 gained about ½ point to close just above 29 bid. The 6.8% bonds due 2039 rose ¼ point to close at 27¾ bid.

Community Health falls

Franklin, Tenn.-based hospital operator Community Health Systems issues trended down, a market source confirmed, amid several maneuvers the company has enacted to resolve its debt issues. In the past week, the company has announced the sales of four hospitals. It had previously told shareholders that asset sales would be a part of its overall debt plan, further saying that more should be expected throughout the year.

The 7 1/8% issues due 2020 fell about ¼ point to close at 81¾ bid. The 6 7/8% issues due 2022 lost about ¾ point to close around 57½ bid.

Remington rises

Madison, N.C.-based gun manufacturer Remington Outdoor saw its paper rise after reports confirmed that the company is seeking an immediate temporary halt of a class-action lawsuit against it concerning faulty Remington-made rifles. The company has indicated it would be willing to continue with settlement proceedings after it exits bankruptcy.

The 7 7/8% paper due 2020 rose about 1 point to close around 26¾ bid.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications continued to lead trading in the distressed telecom sector.

The 7 5/8% notes due 2024 shaved ½ point to close at around 62¼ bid. The 10½% notes due 2022 picked up about ¼ point to close above 83½ bid. The 11% notes due 2025 rose about ½ point to close just below 74¾ bid.

Luxembourg-based satellite communications company Intelsat also contributed volume in telecom.

The Intelsat Jackson SA 5½% issues due 2023 rose ½ point to close at 81 bid. The 7¼% issues due 2020 remained level at about 93½ bid.

Britain-based drugmaker Mallinckrodt returned to high volume in the healthcare space, as its 4¾% paper due 2023 picked up about ¾ point to close around 76¾ bid.

New York City-based cosmetics producer Revlon led in the distressed retail space.

The 5¾% notes due 2021 traded up about ¾ point to close at around 77¾ bid. The 6¼% notes due 2024 fell slightly but remained about level at 61½ bid.

“There’s still some people that haven’t come back from the holiday yet,” a trader said. “That and the volatility in equity markets don’t have a lot of people buying up debt.”

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