JCPenney rises post-earnings; Avon takeover offer deemed false; SandRidge up on debt exchange

By Stephanie N. Rotondo

Phoenix, May 14 – Earnings news was once again helping to push around some distressed credits on Thursday.

J.C. Penney Co. Inc. – whose numbers were released after Wednesday’s close – saw its bonds ending “a little bit better,” according to a trader.

But Getty Images Inc. was lower after its numbers, the trader said.

The results are private and were therefore not released publicly.

The trader said the 7% notes due 2020 were “active” but down a couple points around “54-ish.”

Another trader, however, saw the issue inching up almost half a point to 56½ on “pretty good volume for them.”

Away from earnings, Avon Products Inc.’s debt was little changed after it was reported that PTG Capital Partners had made a takeover bid for the struggling entity. While trading in the stock was volatile –trading was halted three times – it then turned out that the company making the alleged offer was nonexistent.

In the oil and gas space, SandRidge Energy Inc. saw “pretty heavy volume,” a trader said. The company’s bonds ended the session firm as the company announced a private debt-for-equity exchange.

JCPenney up on numbers

JCPenney bonds improved Thursday as investors reacted positively to the company’s late Wednesday earnings release.

One trader saw the 5.65% notes due 2020 at 89¼, up 2½ points. He also placed the 8 1/8% notes due 2019 at 101, up 1½ points.

A second trader pegged the 7.4% notes due 2037 with an 83 handle, deeming that “up a couple points.”

A third market source deemed the 5.65% notes over 3 points higher at 90 bid.

For the quarter ended May 2, the Plano, Texas-based retailer reported net sales of $2.86 billion, up from $2.8 billion the year before.

Same store sales increased 3.4%.

Net loss was $167 million, or 55 cents per share – better than the 77 cents per share analysts had anticipated and a 52% gain year over year.

EBITDA improved to $168 million from $79 million.

Looking ahead, JCPenney revised its guidance, forecasting a 4% to 5% gain in same store sales, versus the 3% to 5% projected before. Free cash flow is expected to break even.

Avon offer false

There was “not much volatility” in Avon Products’ debt on Thursday, though its stock was trading wildly during the session.

The equity’s erratic moves came after PTG Capital Partners said in a regulatory filing that it had made an $18.75 per share offer for the struggling cosmetics company – a total value of $8.2 billion, or about three times above the company’s current market value.

Eventually, Avon responded by saying that not only had it not received any offer from PTG, it was not even sure that PTG even existed.

A trader said the 5¾% notes due 2023 inched up slightly to 88½, while the 6½% notes due 2019 dipped about a quarter-point to 99¼. However, he noted that there was not much trading in either issue.

The stock (NYSE: AVP), on the other hand, saw well above average trading during the session. The common stock closed at $7.07, up 40 cents, or 6%. But the paper traded in a wide range of $6.545 to $8 per share.

SandRidge swaps debt

SandRidge Energy said in a regulatory filing on Thursday that it had wrapped a private debt-for-equity exchange with a single investor.

On the news, the Oklahoma City-based oil and gas company’s bonds were improving.

A trader saw the 7½% notes due 2021 rising a quarter-point to 70¾, while the 8 1/8% notes due 2022 gained nearly a point to 70¼.

SandRidge swapped $29 million of the 2021 notes for just over 16.3 million common shares and another $21 million of the 2022 notes for about 11.63 million shares.

Following that news, Standard & Poor’s cut its rating on the company to CCC+ from B and on its senior notes to CCC from B-.

Elsewhere in the energy arena, Energy XXI’s debt was dubbed “the most active high yield bond, according to Trace” by a trader.

That paper, however, was weaker on the day, despite a lack of any news to act as a catalyst.

The trader saw the 11% notes due 2020 fall over 2 points to 91 5/8. The 8¼% notes due 2018 meantime ended at 73, down a deuce.

Another trader said the bonds were “bouncing around,” seeing the 11% notes hit a low of 91 before rebounding to 93.

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