Peabody Energy sees renewed gains amid tumultuous oil news; Rent-A-Center debt in retreat; Vanguard firms

By Colin Hanner and Stephanie N. Rotondo

Chicago, Oct. 11 – Sandwiched between the long Columbus Day weekend and the start of Yom Kippur, distressed debt varied but saw gainers in the energy sector.

Speculation of the Federal Reserve raising interest rates before the end of the year might have affected the trading.

“Coal continues to be one of the more active spaces,” a trader said. “It continues to go higher and higher.”

Peabody Energy Corp. gained 3¼ points on the day. One trader commented that the 10% notes due in 2022 were “up a couple of points, touched as high as 59,” and closed just above 57. The company’s 6% notes due 2018 were up a few points as well, trading around 37.

Murray Energy Corp. 11¼ % notes were “up a few points” to 69, a trader said.

In oil and natural gas exploration firms, California Resources Corp. and Linn Energy LLC, saw increases amid news that Russian Prime Minister Vladimir Putin said Monday that he would support the Organization of the Petroleum Exporting Countries’ proposal to halt oil production to retreat on slumping oil prices. That was dwarfed on Tuesday when Russia’s state-owned Rosneft PJSC said it would not consider cutting oil output.

Oil slumped from its 15-month high in the process.

California Resources’ 8% notes due in 2022 were up 3¼ points to 37¼, and Linn Energy’s 7¾ % notes due 2021 were up 1½ points to 27.

Energy aside, the day’s biggest loser was Rent-A-Center Inc., as the company reported weak preliminary quarterly results.

Rent-A-Center trimmed

Rent-A-Center bonds took a hit Tuesday, after the Plano, Texas-based furniture and electronics rental company reported dismal preliminary third quarter results.

“Rent-A-Center was one of the more active names on poor numbers, they were down a fair amount,” a trader said. The trader said the 6 5/8% notes due 2020 were down about 10 points to 86.

The results showed a 12% decline in same-store sales year over year. The company added that U.S. gross profit as a percentage of total revenue would be flat.

The company attributed the weak figures to a new point-of-sale system, citing “system performance issues and outages that resulted in a larger than expected negative impact on core sales.

“While we expect it to take several quarters to fully recover from the impact to the core portfolio, system performance has improved dramatically and we have started to see early indicators of collections improvement,” Robert D. Davis, chief executive officer, said in a statement.

Vanguard improves

Vanguard Natural Resources LLC’s preferreds were trading up Tuesday, even as domestic crude oil prices retreated 1.2% on the day.

In fact, Vanguard’s preferreds were among the day’s biggest percentage gainers.

The 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) rose $1.60, or 50%, to $4.80. The 7.625% series B cumulative redeemable preferred units (Nadaq: VNRBP) – the most active of the two issues – improved $1.22, or 38.98%, to $4.35.

On Oct. 3, the MLP said that it was skipping a $15 million coupon payment on its senior notes as it waited to see how banks would recalculate its credit facility.

As for oil prices, they came in Tuesday following a 3% gain seen on Monday. The gains were due to comments made by OPEC and Russia regarding the possibility of a production cut agreement.

However, the commodity was pressured come Tuesday on concerns a deal might not appear.

It did not help that the International Energy Administration reported record-high production from OPEC in September.

© 2015 Prospect News.
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