Oil retreats as energy mixed on day; Quorum Health sees decline ahead of results; several retailers slide

By Colin Hanner

Chicago, Oct. 26 – Earning reports and a swing in oil markets dictated trading for distressed debt on Wednesday, as several companies bowed to less-than-desirable quarterly reports and the continued speculation around oil supply.

Perhaps the biggest decliner of the day was Quorum Health Group Inc., which “looked like they were trading under some distress today,” a trader said.

The trader said the company’s 11 5/8% notes due 2023 were down “more than 5 points” to 79½. The company announced on Tuesday that it will report its quarterly results on Nov. 9.

In oil and natural gas, explorer and producer California Resources Corp. saw movement in its 8% notes due 2022, which were down 2½ points to 71¾, per a market source. A trader had the same notes down 1½ points to 71.

The company will announce its earnings next on Nov. 3.

Oil retreated to under $50-per-barrel during morning trading due to swirling speculation on the Organization of Petroleum Exporting Countries and its willingness to agree to supply cuts at the end of November.

The weekly petroleum status report by the Energy Information Agency showed slight decrease in U.S. crude inventories by 553,000 barrels during the week ending Oct. 21. Previous estimates had projected a several million-barrel increase for the same period.

The unexpected report seemed to do little to help the price of oil, as the decline in supply was centered on the West Coast region. Both Western Texas Intermediate crude and Brent crude settled below $50-per-barrel at close.

Western Texas Intermediate crude was down 85 cents, or 1.70%, to $49.11.

Brent crude was down 92 cents, or 1.81%, to $49.87.

Linn Energy LLC defied the trend of oil on the day in its 7¾% notes due 2021, which were up ¼ point to 31½, a market source said.

Geoscience company CGG SA’s 6½% notes due 2021 were up ½ point to 51, and its 6 7/8% notes due 2022 were down a ¼ point to 50¼. Another trader had those notes at 50½ on the day.

The company recently inked a contract with Pemex — Mexico’s state-owned petroleum company — for an undisclosed amount.

Coal and metals

Peabody Energy Corp. seems to be straggling after the upward trend it had felt in the past week, as its notes continued to fall on Wednesday.

A market source had the 6½% notes due 2020 down 2¼ points to 47½, and a trader saw 6% notes due 2018 down 4 points to 46.

Murray Energy Corp.’s 11¼% notes due 2021 traded down ¼ point to 75 on “a dozen or so trades,” a trader said.

The company announced on Wednesday it will sell over 5,900 acres of its Utica Shale natural gas and oil reserves for $63.6 million and will use certain proceeds from the transaction to reduce its debt.

Gold, silver and copper mining company Freeport-McMoRan Inc.’s 5.45% notes due 2043 were up 1/8 point to 82½, a trader said.

Its 4.55% notes due 2024 were up ½ point to 92½.

Movement in Freeport’s notes come a day after the company announced their quarterly results, which fell below market estimates.

Retail round-up

Gymboree Corp., whose 9 1/8% notes due 2018 traded around 67 during Tuesday’s trading, saw a handful of trades in the low 50s on Wednesday. One market source had two heavy volume trades at 50 and 50¼, respectively.

At the end of closing on Tuesday, the children’s retailer reported third quarter earnings, which included a 4% decrease in net sales to $250.3 million.

Claire’s Stores Inc., the accessory and jewelry retailer, 9% notes due 2019 traded at 52¼, down 1½ points, a trader said.

A trader said that Bon-Ton Department Stores Inc.’s 8% notes due 2021 traded at 52¾, down 1¾ points on the day.

Other movers

Concordia International Corp.’s 7% notes due 2023 were down 3½ points to 59¼, and its 9½% notes due 2022 were down 4¼ points to 62½, a trader said.

The pharmaceutical company announced it will release its third quarter results before market open on Monday, Nov. 7.

Intelsat Corp.’s Jackson-linked 5½ notes due 2023 were down ½ point on “one trade” to 67¼, a trader said.

A market source put the company’s Jackson-linked 7¼% notes due 2019 down 1 point to 80½.

Fresh off the announcement of its sale to China Oceanwide, Genworth Financial Inc.’s 6½% notes due 2034 traded down 1½ points to 78½ on a single trade, a trader said.

Valeant Pharmaceuticals International Inc.’s 5 7/8% notes due 2023 were down 3/8 point to 82¼.

Its 6 1/8% notes due 2025 were unchanged at 82¼, a trader said.

iHeartCommunications Inc.’s 10 5/8% notes due 2023 were down ¼ to 73 ½, a market source said.

The slight movement comes a day after its subsidiary, Clear Channel Outdoor Holdings, Inc., sold Australian out-of-home media company Adshel for $204 million, which it intends to use for general corporate purposes, according to an 8-K filing.

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