Distressed bonds lean toward mixed as liquidity muted; energy follows the trend; Claire’s weaker

By Stephanie N. Rotondo

Seattle, July 18 – The distressed debt market spent Monday in the grips of the “summer doldrums,” a trader said.

Liquidity was limited not only in distressed issues, but in the broader space as well, he noted.

“New [high-yield] issues are trading here and there,” but nothing was overly active, he said.

And even among those issues that were garnering investors’ attention, there was little in the way of price moves.

For instance, Intelsat SA’s 8% notes due 2024 continued to hang around “91-ish,” a trader said.

The notes have been in a 90 to 91 context for several sessions, even as the company wrapped a previously announced tender offer for its Intelsat Jackson Holdings SA unit’s 6 5/8% notes due 2022.

“They still remain pretty active,” a trader commented of the 8% notes.

The energy sector was meantime trending mixed as domestic crude oil prices dropped 1.5% on the day, due to an unexpected supply build at the Cushing, Okla.-based delivery point.

A trader said California Resources Corp.’s 8% second-lien notes due 2022 were “definitely lower,” trading in a 72 to 73 zip code. That was down from 74, he said.

But Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were “about unchanged,” according to a trader, who placed the debt “right around 90.”

A second market source called the 6 5/8% notes due 2020 almost a point better at 74¾ bid.

On Monday, Genscape reported that crude supplies increased by 26,460 barrels last week.

Elsewhere, Claire’s Stores Inc.’s 9% notes due 2019 were deemed “a little bit lower” at 53½.

On July 11, the Pembroke Pines, Fla.-based jewelry retailer said in a regulatory filing that second-quarter results would be worse than expected. The company said that as of July 10, same-store sales were down 5.9%, consisting of a decline of 4.2% in North America and an 8.6% decrease in Europe. Expectations for adjusted EBITDA were placed between $37 million and $41 million for the second fiscal quarter, which compared to $59.9 million the year before.

Operating income was also forecast lower, in a $25 million to $29 million range. By comparison, operating income was $38.7 million the previous year.

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