Oil price rally lifts energy sector; JCPenney rises as investors prepare for quarterly results

By Stephanie N. Rotondo

Phoenix, Feb. 25 – The distressed debt market was up smartly Wednesday and oil prices were also experiencing a hefty rebound.

With the gains in oil prices – brought on by expectations that demand will soon rise – the energy sector was also ending with a firmer feel.

Energy XXI was the name dominating that space, according to a trader. He said that both the 8¼% notes due 2018 and the 9¼% notes due 2017 traded at least 20 times in round lots, with the former ending up a quarter-point at 69¼ and the latter 3½ points higher at 71½.

Comstock Resources Inc. was also higher as the company launched a roadshow for a $700 million sale of five-year notes.

A trader saw the 9½% notes due 2020 rising 1½ points to 66.

Swift Energy Co.’s 7 7/8% notes due 2022 were meantime a quarter-point higher at 49¼.

Even oil-related names were getting a boost. Key Energy Services Inc.’s 6¾% notes due 2021 inched up a quarter-point to 66¼, while CGG SA’s 6½% notes due 2021 put on a point, ending at 81 bid.

West Texas Intermediate crude gained $1.67, or 3.39%, to $50.95 per barrel, while Brent crude improved $3.08, or 5.25%, to $61.74.

JCPenney up before earnings

J.C. Penney Co., Inc. debt was on the rise Wednesday, as investors prepare for the company’s earnings release on Thursday.

A trader saw the 5.65% notes due 2020 closing up nearly a point at 86. Another market source pegged the issue at 86 bid, up 1½ points.

Analysts are expecting earnings of 11 cents per share on gross revenue of $3.86 billion. Same-store sales are also expected to gain ground.

Elsewhere in the retailing world, Toys “R” Us Inc.’s 7 3/8% notes due 2018 gained momentum again, closing up over a point to 67¼ bid, according to a source.

Another trader placed the bonds at 67¼, up almost a point.

The name started moving higher on Monday after the company gave a presentation at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami. In the presentation, the Wayne, N.J.-based retailer announced preliminary quarterly results that seemed to please investors, who in turn boosted the company’s bonds.

For the quarter, the Wayne, N.J.-based retailer said net sales fell to $12.4 billion from $12.5 billion. U.S. sales dropped 4.5% and international sales improved 2.2%.

Adjusted EBITDA is expected to be about $57 million.

Also improving were Claire’s Stores Inc.’s 8 7/8% notes due 2019, which finished the session up over a point at 63.

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