Bankruptcy news sets in for Vanguard Natural; Algeco Scotsman up on exchange news; Neiman trades tightly

By Colin Hanner

Chicago, Feb. 3 – The week in distressed trading was capped by another session where focus was on new high-yield issues, traders said Friday, though a company that recently entered bankruptcy was the most actively traded issue in the distressed space.

“High-quality, high-yield issues were rallying with the market today,” a trader said. The Dow made its biggest jump of the calendar year thus far, with a strong employment report bolstering Wall Street sentiment.

In the distressed arena, Houston-based natural gas company Vanguard Natural Resources, LLC, which on Thursday announced it had entered Chapter 11 protection, fell once news was given a session to ferment.

“It continued its downward trend today,” a trader said, adding the issue traded off several points.

Aside from a few outliers that traded outside of a point from where they started, including Algeco/Scotsman Holding Sarl, Hornbeck Offshore Services, Inc. and Diamond Offshore Drilling, Inc., securities tended to traded tight.

Retailer Neiman Marcus Group, Inc. continued to see tight mixed movement in two of its issues, Valeant Pharmaceuticals International, Inc. and Community Health Systems, Inc. were mixed in both directions and Avaya Inc. moved modestly higher.

“There was not much in the way of [iHeartCommunications, Inc.] or [Intelsat SA],” either, a trader said, characterizing a week where commonplace distressed names did not veer far from where they started.

Chapter 11 sets in for Vanguard

On Thursday, Vanguard Natural Resources announced it had filed for Chapter 11 bankruptcy protection, news that did not faze its 7 7/8% notes due 2020 initially.

A day later, the news seemed to set in as traders said the most actively traded name – and one of the biggest losers on the day – was the said notes, which were down 3 points to 75, a trader said.

“They were one of the more notable price movers,” the trader said.

Another trader said they were trading around 77, adding that last week the securities were trading in the low-to-mid 80s.

As part of the Chapter 11 announcement, Vanguard said it had received a committed $50 million debtor-in-possession financing facility by several underwriters to add to the liquidity through the process, according to a news release.

Algeco sees big gain

Friday brought about one of the biggest gains of the week in Algeco Scotsman’s distressed securities after the global modular space and portable storage business announced its subsidiary had signed a restructuring support agreement with holders of nearly three-fourths of the principal amount of payment-in-kind loans, a news release said.

The exchange offer will “relieve the Algeco Group of the substantial debt burden associated with the PIK loans, which mature in May 2018,” said the company in the release.

A trader said the 10¾% notes due 2019 were up 9 points to 86, with “a bunch of trades in the 85 to 86 context.”

In the middle of last month, the notes were trading around 76, the trader said.

Drillers mixed

Ahead of its fourth quarter earnings on Monday, Diamond Offshore Drilling’s 4 7/8% notes due 2043 were up 2 points to 73½, a market source said.

On the other hand, Hornbeck Offshore Services’ 5% notes due 2021 were down to 69¾ on, “let’s call it 1½ points,” a trader said.

There did not seem to be any apparent news surrounding Hornbeck, and the company will release its quarterly results on Feb. 13.

London-based Ensco plc’s 4½% notes due 2024 were also down 1/8 point and finished with an 89 1/8 handle, a market source said.

Other E&P

Oil futures went out on a high note on Friday and following were California Resources Corp.’s 8% notes due 2022, which were up 1½ points to 90½, a trader said.

In coal, St. Clairsville, Ohio-based Murray Energy Corp. saw a ¼-point rise in its 11¼% notes due 2021 to 73¼.

Neiman varies

Not since early last week have Neiman Marcus Group’s distressed issues traded wildly, and, on Friday, the pattern of tight trading continued.

“They continue to slip a little bit,” a trader said of the 8¾% notes due 2021, which were down ½ point to 57½. Another trader saw similar movement to the same handle.

Neiman’s 8% notes due 2021 bucked the declining trend, a trader said, and were up ¼ point to 61¼.

In health and pharma

For the second-straight session, Community Health’s 6 7/8% notes due 2022 were down, this time an 1/8 point to 73 5/8, a market source said. On Wednesday, the notes traded about the same margin upward.

In pharmaceuticals, Valeant Pharmaceuticals’ 6 1/8% notes due 2025 were up 5/8 point to 77, while the 5 7/8% notes due 2023 were unchanged at 77 5/8.

Distressed roundoff

Not oft-traded CNG Holdings, Inc. – a check cashing service company – saw a 1-point gain in its 9 3/8% notes due 2020, which finished with an 85 3/8 handle, a trader said.

And for other regularly traded names, like Intelsat Jackson Holdings SA, there was not much movement to be had.

The Jackson-linked 7¼% notes due 2020 were up 5/8 point to 79¼, a market source said, while the 7½% notes due 2021 were up ¼ to 77¾.

For iHeartCommunications, the 14% notes due 2021 were up 1 point to 36½ after dropping several points on Thursday, a trader said. The 9% notes due 2021 were up 1/8 point to 76.

And rounding out movers were Avaya’s 7% notes due 2019, which moved “marginally today,” a trader said, a ½-point gain to an 82 to 82½ context.

© 2015 Prospect News.
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