Oil prices rally, energy sector follows suit; JCPenney bonds up big on improved holiday sales

By Stephanie N. Rotondo

Phoenix, Jan. 7 – Distressed debt investors were “very active in oil and gas,” a trader said Wednesday, as oil prices rallied a bit.

The price of oil was rebounding during the session, but it did lose some of those gains by the bell. In fact, Brent crude oil finished in the red, declining 29 cents to $50.81 per barrel for February deliveries.

West Texas Intermediate crude meantime gained 43 cents to $48.36.

While some oil and gas names did see decent gains in the wake of the oil increase, it was J.C. Penney Co. Inc. that was the day’s big mover.

Late Tuesday, the company said same-store sales for the nine-week holiday period were up 3.7% year over year. Come Wednesday, the company’s debt was trading up as much as 5¾ points.

The equity also popped, rising over 20% on the day.

Oil price gain ups sector

With oil prices looking to stage a comeback, the oil and gas sector continued to be in focus in midweek trading.

One trader said that California Resources Corp.’s 6% notes due 2024 were particularly active, with almost $30 million in trades.

The trader saw the issue climbing just over a point to 81¾.

The company’s 5½% notes due 2021 were also better, inching up just a quarter-point to 82¼.

Among independent oil producers, Linn Energy LLC’s 8 5/8% notes due 2020 were deemed up over a point at 88¼, while the 7¾% notes due 2021 gained almost 2 points, closing around 85¾.

At another desk, the 7¾% notes were pegged at 85½ bid, up half a point.

Halcon Resources Corp.’s bonds finished at least 2 points better day over day, according to a trader.

The trader placed the 9¾% notes due 2020 at 73 3/8 and the 8 7/8% notes due 2021 at 72 1/8.

Rounding out that group was Samson Investments Co.’s 9¾% notes due 2020, which improved just under half a point to 36¼, the trader said.

JCPenney rises on sales

JCPenney’s debt was soaring Wednesday, as investors reacted to positive holiday same-store sales figures that were released late Tuesday.

A trader reported that the Plano, Texas-based retailer’s bonds gained as much as 5¾ points in the wake of the 3.7% holidays sales increase.

It was the 5.65% notes due 2020 that gained the most, closing at 83¼, he said.

The 6 3/8% notes due 2036 then rose 4½ points to 71½. The 7.4% notes due 2037 improved 4 points to 74½.

The shorter maturities were not up as much, but still saw decent gains. The 5¾% notes due 2018 increased 2½ points to 92, while the 8 7/8% notes due 2019 put on 2¾ points, ending around 92¾.

As for the company’s stock (NYSE: JCP) it jumped $1.33, or 20.27%, to $7.89.

Late Tuesday, JCPenney announced that its holiday same-store sales improved 3.7% year over year and that it was expecting its quarterly sales increase to be at the higher end of its projections.

The company had previously forecast 2% to 4% sales growth.

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