Community Health mixed after latest asset sale; Hexion mixed in upswing of activity

By James McCandless

San Antonio, June 26 – Traders reported volume was once again restricted to volume favorites on Tuesday as the market nears the Fourth of July holiday.

Community Health Systems, Inc. notes were mixed after the company announced a definitive agreement to sell one of its Oklahoma hospitals.

Hexion, Inc. issues were mixed, jumping up in activity despite the lack of major news from the company.

Frontier Communications Corp. paper was mixed. Last Thursday, the company announced that its chief financial officer would resign.

Intelsat SA notes gained. Recently, the company announced a buyback plan for its 7¾% notes due 2021.

PetSmart, Inc. issues were mixed. An ongoing dispute with its creditors over a recent equity transfer has cast a pall over its operations.

PHI, Inc.’s paper declined. The company recently announced a cash tender offer for its 5¼% notes due 2019.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems notes were mixed, traders confirmed, after the company announced Tuesday that it had entered into a definitive agreement to sell one of its Oklahoma hospitals to a subsidiary of Oklahoma-city based hospital facilities operator INTEGRIS Health. The sale is expected to close in Q3 2018, making it the 10th in a series of planned asset sales.

Also Tuesday, Standard & Poor’s lowered the company’s corporate credit rating and the rating on its 6 7/8% notes due 2022 (see related story elsewhere in this issue).

Last Wednesday, the company announced the final results of exchange offers for three series of notes by its subsidiary CHS/Community Health Systems, Inc. It received valid tenders for $1,770,337,000, labeling the offering oversubscribed.

The 7 1/8% notes due 2020 gained about 6½ points to close at 92 bid. The 6 7/8% notes due 2022 lost about ¾ point to close at 54 bid.

On Monday, the 7 1/8% notes lost the 6 ½ points that it gained back Tuesday and the 6 7/8% notes lost about ¼ point.

Hexion active but mixed

Columbus, Ohio-based chemicals producer Hexion saw its issues active and mixed, market sources confirmed, though there was no news out on the company.

“It seems like there’s a spike in Hexion every once in a while but the reasons are never clear,” a trader said. “It was a top trader today but there’s no word out on why.”

The 6 5/8% notes due 2020 picked up ½ point to close at 95 bid. The 9% notes due 2020 lost about 1½ points to close at 85½ bid.

Frontier also mixed

Norwalk, Conn.-based wireline name Frontier Communications paper was mixed, traders confirmed. The company announced last week that CFO Perley McBride would leave the company on Aug. 31.

Recently, an auction for the company’s Florida assets did not produce a satisfactory bid.

The 7 5/8% paper due 2024 was level at around 71¾ bid. The 10½% paper due 2022 was level at 91½ bid. The 11% paper due 2025 fell ½ point to close at 81½ bid.

On Monday, the 7 5/8% paper dropped about ¾ point, the 10½% paper lost 1¼ points and the 11% paper fell ¾ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat, another name in distressed telecom, saw its notes improve. Recently, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

“The 8 1/8% notes were one of the most active on the day,” a trader said.

The 7¾% notes due 2021 rose about 1¼ points to close at around 92¼ bid. The 8 1/8% notes due 2023 jumped up about 4¾ points to close at around 80¾ points.

On Monday, the 7¾% notes fell about 1¼ points and the 8 1/8% notes lost about 3 points.

Phoenix-based pet supplies retailer PetSmart issues were mixed as the company and its creditors prepare for a dispute over the recent transfer of 36.5% of its stake in e-commerce segment Chewy.com to private hands, making less available to bondholders.

The 5 7/8% notes due 2025 were level at 76½ bid. The 8 7/8% notes due 2025 shaved off ¼ point to close at 64 bid.

Lafayette, La.-based offshore energy transportation name PHI’s paper fell. Last Friday, the company announced a cash tender offer to purchase any and all of its $500 million in outstanding 5¼% senior notes due 2019.

The 5¼% notes due 2019 lost about ½ point to close at around 97½ bid.

“Distressed pretty much ground to a halt today,” a trader said. “It already feels like the Fourth of July holiday.”

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