Distressed bonds end strong as week ends; Intelsat rally continues; Claire’s debt marches upward

By Stephanie N. Rotondo

Seattle, Aug. 5 – The distressed debt market was on the rise as the week came to a close, market sources reported.

“It seemed like everything was rallying today,” a trader said. “The market feels strong – strong like a bull.”

Intelsat SA paper continued its upward moves, as a trader saw the 7¾% notes due 2021 adding “another point and a half” to close at 28½.

“It seemed like everything was up 1 to 2 points in Intelsat,” he added.

Meanwhile, Claire’s Stores Inc.’s debt was “up some more,” according to a trader.

He placed the 9% notes due 2019 at 61¾. For the week, he said the bonds have gained “almost 7 points.”

The Pembroke Pines, Fla.-based retailer is reportedly in talks with creditors on a restructuring plan. Though there has not been any news about it, the upward shift appears to indicate that talks are going well.

“I keep seeing more and more chatter on that,” the trader said.

Also rising were the “leftover pieces” of Getty Images Inc.’s 10½% notes due 2020, a market source said.

“I think numbers came out” earlier in the week, the source said. But as the numbers are private, he had not seen them for himself.

“They have rallied for the past couple of days,” he noted. On Friday, paper traded up to 58½, a gain of “another 3 points.”

Just prior to the supposed earnings release, the debt was in the high-40s, he said.

California Resources eyed

California Resources Corp. bonds continued to be in active in the wake of the company’s earnings release on Thursday.

But a trader speculated that the bonds’ activity was more due to the company’s cash tender offer that was announced on Monday.

The trader said the 8% second-lien notes due 2022 were “probably about where they were” on Thursday, trading “around 56.” But the 5½% notes due 2021 were “up a lot,” trading to “around 50” from previous levels in the mid-40s.

The 5½% notes and the 6% notes due 2024 are the second priority in the $525 million tender, taking a backseat to the 5% notes due 2020.

The 8% notes are the last priority level.

Given the amount of cash the company intends to use to take out the various issues, a trader said he thought most of the 5½% notes would get taken out.

“Consideration gets you to 54,” he said of the amount offered for the 5½% notes. “I think with those prices, they can buy back almost all of the 5% notes and 5½% notes.”

Even if there was some amount of the 5½% notes outstanding, “the stub piece would still be inside the maturity, so it still might be a good piece of paper to own.”

Furthermore, California Resources could be aiming to do just that – that is, take out a majority of the second-priority notes along with the first – as the company upped a new term loan it is shopping to $1 billion from $700 million.

Pricing was also lowered to Libor plus 1,037.5 basis points from Libor plus 1,050 bps, according to a market source.

The term loan still has a 1% Libor floor and an original issue discount of 99, the source said.

In the second quarter, the Los Angeles-based oil and gas producer reported a net loss of $140 million, or $3.51 per share. That compared to a net loss of $68 million, or $1.78 per share, the year before.

On an adjusted basis, the loss per share was $1.80, versus the $1.30 per-share-loss seen in the same quarter of 2015.

Revenues declined 50.4% to $317 million.

Analysts had expected to see an adjusted loss-per share of $1.34 on revenue of $437.47 million.

The company noted that it did not have any active drilling rigs during the quarter.

Sara Rosenberg contributed to this article.

© 2015 Prospect News.
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