Quiet day capped by more Avaya activity; Intelsat rises; Bonanza down slightly post-settlement; E&P up

By Colin Hanner

Chicago, Jan. 26 – The pouring of earnings didn’t bring the equity markets from a lull on Thursday, and that was much of the same story in distressed-land, traders said, with some of the most active issues mirroring names from previous sessions, though in lower overall activity.

Among them, Avaya Inc. was the most actively traded issue, a trader said, but on the overall it “wasn’t that active at all.” Trading was mixed on the session for two sets of its notes.

Down the list, Intelsat Jackson Holdings SA and Intelsat Connect Finance SA continued their trek north in several notes that were up several points, a recent upswing that followed a downward trend in recent sessions.

After it reached a settlement in relation to its bankruptcy claims on Thursday, Bonanza Creek Energy, Inc. fell slightly in one of its issues, mirroring the downward movement seen in the company’s equity stock on the day.

Hospital group Community Health Systems, Inc. were strong again on Thursday, seeing a boost in one set of its bonds.

Offshore drillers, including Noble Corp. and Pacific Drilling SA, continued to see gains after a series of executive orders by President Trump late Tuesday fueled confidence that his administration would be supportive of the exploration and production sector. Oil futures rallied, as well.

Retailer Neiman Marcus Group, Inc. stepped out of the spotlight for the session, trading tightly from the previous session, as did iHeartCommunications, Inc.

‘Most active’ Avaya mixed

Building on its streak as one of the more active issues in the distressed arena, telecommunications company Avaya, Inc. saw a mix of movement in two sets of issues.

“Avaya continues to be active,” a trader said.

Avaya’s 7% notes due 2019 – the most active issue out of any distressed name on the day, according to one trader – were up ¼ point to 84. Another trader said the notes were nearly unchanged, trading in an 83¾ to 84 zip code.

The 10½% notes due 2021, which traded up 10 points on Wednesday’s session, “dipped a little bit” and “gave back” a few points to a 27 to 28 context, a 5 to 6 point loss on the session, a trader said.

Intelsat trekking up

The recent resurgence in Intelsat SA-related securities may have been due to a recent equity upgrade by RBC Capital, which rated it as “outperform.”

“If equity is being upgraded, maybe there’ll be a rebound in the bonds as well,” a trader said, speculating on the sharp movement in the notes in the past two sessions.

Intelsat Connect Finance SA’s 12½% notes due 2022 were up “1½ to 2” points to around 62, a trader said.

In Intelsat Jackson Holdings’ 7½% notes due 2021, a similar 2-point increase capped the notes with a 74½ handle on the day.

The similarly held 7¼% notes due 2020 were up 1½ points to 75, a trader said.

And a market source said the 7¼% notes due 2019 were up 1¾ points to 83½.

On Wednesday, RBC Capital upgraded Intelsat to outperform from sector perform with a price target of $6.25. Intelsat closed at $3.25 per share on Thursday.

Bonanza down modestly

On Thursday, Bonanza Creek Energy, Inc. reached an agreement in principle with Silo Energy, LLC and an informal committee of unsecured noteholders to settle claims related to Bonanza’s bankruptcy case, according to an 8-K filed Thursday with the Securities and Exchange Commission.

Under the agreement, Silo will have an allowed $75 million unsecured claim against Bonanza Creek and will receive a distribution of new common stock equal in value to $2.7 million, unless the company elects to pay the distribution in cash.

Bonanza’s stock fell 19 cents, or 6.64%, to $2.67, and while its 6¾% notes due 2021 traded with moderately high volume, they finished down ¾ point to 91, a market source said.

Community Health up, Valeant pares

Building on Thursday’s sudden increase, Community Health’s 6 7/8% notes due 2022 were up 1 1/8 points to 73¼, a trader said. A market source said the same notes traded up ½ point to the same level.

A day after rumors surfaced that Valeant Pharmaceuticals International, Inc. had gained interest for its Eastern European assets, Valeant’s 6 1/8% notes due 2025 were down ½ point to 76¼, a trader said.

E&P up, again

Executive orders by President Trump surrounding the construction of two oil pipelines in the U.S., as well as rising oil future prices and company-specific news, seem to be a source of good news for driller and producers, alike.

Houston-based Pacific Drilling SA, which announced it had reached an agreement with its banking group to make amendments to its $500 million revolving credit facility and $1 billion senior secured credit facility on Tuesday, saw a 2 5/8-point bump in its 5 3/8% notes due 2023, which finished the session at 50½ on a handful of trades.

Noble Corp.’s 5¼% notes due 2022 were up another ¾ point on Thursday to 73½, a trader said, days after a renewed contract.

Hornbeck Offshore Services, Inc.’s 5 7/8% notes due 2020 were unchanged at 75½, a market source said.

Rounding out E&P movers were Linn Energy, LLC’s 7¾% notes due 2021, which were up 2¾ points to 47½, a market source said, and California Resources Corp.’s 8% notes due 2022, which were up ½ point to 90.

A swirl of activity

After much of the distressed market had attention turned to Neiman Marcus Group for the past few sessions, activity fell on Thursday. The 8% notes due 2021 were “not as active,” a trader said, and traded down ¾ point to 65.

Private coal company Murray Energy Corp.’s 11¼% notes due 2021 were down ½ point to 73, a trader said.

iHeartCommunications, Inc. was quiet, a trader said, and another trader said the 11¼% notes due 2021 were unchanged at 80.

And a trader said that Hertz Global Holdings, Inc.’s 5½% notes due 2024 were up ½ point to 84½.

Caroline Salls and Marisa Wong contributed to this review

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