Distressed/underperforming market quiet; energy names mixed, Neiman Marcus, Staples up, telecoms firm

By Paul Deckelman

New York, Nov. 21 – For a second consecutive session, things were generally quiet on Tuesday in the market for distressed debt and the bonds of otherwise underperforming companies and sectors, in line with a generally quieter session in the broader high-yield bond market in the run-up to Thursday’s Thanksgiving Day holiday break in the United States, when the debt markets there will be closed.

Energy issues were something of a mixed bag, even as world crude prices strengthened after having moved lower on Monday.

EP Energy Corp.’s bonds were active, with some up and others down. Denbury Resources Inc. paper gained, while SM Energy Co. and Southwestern Energy Co. were off on the day. Offshore oilfield transportation company Bristow Group was also lower.

Among the retailing names, Neiman Marcus Group Ltd. LLC’s paper firmed solidly in active trading after the upscale department store and catalog retailer reported quarterly numbers and held an upbeat conference call.

And Staples Inc. was particularly firm in very active dealings, though there seemed to be no fresh news out on the office-supply retailer.

In the communications cluster, domestic wireline operators Frontier Communications Corp. and Windstream Holdings, Ltd., wireless operator Sprint Corp., European cable and broadband provider Altice SA and communications satellite company Intelsat Jackson Holdings SA were all seen better on the day.

Retailers on the rise

Traders saw several retail names better, including Staples Inc.’s 8½% notes due 2025, which firmed smartly to 89 3/8 bid, a gain of more than 2 points on the day.

More than $41 million of those notes traded.

A trader said he had not seen any fresh news out on the Framingham, Mass.-based office supply retailer that might explain the gain.

Neiman Marcus Group’s 8% notes due 2021 finished up 1½ points on the session at 57¾ bid, with over $19 million having traded.

Its 8¾%/9½% senior PIK toggle notes due 2021 – which are now paying interest in kind through the issuance of additional notes rather than in cash – were up nearly 3 points from their most recent previous round-lot levels seen at the end of trading last week, finishing Tuesday just under 55 bid, with around $5 million traded.

The Dallas-based high end department store and luxury catalog retailer reported results for the 2018 fiscal first quarter ended Oct. 28, including comparable-store sales and a $10 million rise in adjusted EBITDA from the year earlier quarter.

On their conference call following the release of the numbers, company executive touted the success of their “Digital First” strategy to grow the traditional brick-and-mortar stores company’s online selling presence.

They also noted that NMG finished the quarter with what its chief financial officer called “more than ample” liquidity of $657 million of cash, equivalents and revolving credit facility availability, and has no significant debt maturities coming due for nearly three years, till October 2020.

Energy issues mixed

Elsewhere, traders saw energy credits mixed on the day, even against a backdrop of stronger world crude oil prices following Monday’s retreat.

Houston-based oil and natural gas exploration and production operator EP Energy’s 9 3/8% notes due 2020 ended down 1/8 point at 75 13/16 bid, with over 433 million having changed hands.

But its 8% notes due 2025 gained about 5/8 point on the day to end at 67 5/16 bid, on volume of over $30 million.

Plano, Texas-based sector peer Denbury Resources’ 6 3/8% notes due 2021 were more than 2 point winners on the day, finishing at 75 bid.

Elsewhere among the energy names, Southwestern Energy’s 4.1% notes due 2022 eased to 97 11/16 bid from round-lot trading levels late last week at 98, with around $9 million traded.

SM Energy’s 6 1/8% notes due 2022 lost 7/8 point to finish at 100½ bid.

Houston-based helicopter transportation company Bristow Group – which does much of its business flying people and equipment out to offshore energy drilling platforms – was seen losing some altitude Tuesday after having gained on Monday.

Its 6¼% notes due 2022 ended at 80½ bid, down 1½ points on the day, surrendering its Monday gains. Volume was over $11 million.

West Texas Intermediate crude for January delivery, the new front month gained 41 cents per barrel on the New York Mercantile Exchange Tuesday, settling at $56.83, after having lost 29 cents on Monday.

And January contract North Sea Brent crude firmed by 35 cents per barrel in London futures trading, to $62.47, after having retreated by 50 cents on Monday.

Communications names climb

Traders said the communications sector, recently under pressure, was better pretty much all around on Tuesday.

Stamford, Conn.-based wireline provider Frontier Communications’ 10½% notes due 2022 edged up by 1/8 point to 80½ bid, on volume of over $15 million, while little Rock, Ark.-based sector peer Windstream Holdings’ 7½% notes due 2023 gained a deuce on the day to end at 69 bid.

Netherlands-based cable and broadband service provider Altice’s 7½% notes due 2026 improved by 1/8 point to 107 bid, while its SFR SA unit’s 7 3/8% notes due 2026 was 1/16 point better at just over 103½ bid, with over $15 million traded on both.

Overland Park, Kan.-based wireless provider Sprint’s 6% notes due 2022 were ¼ point better at 100½ bid, with over $16 million traded.

And Luxembourg-based communications satellite company Intelsat Jackson’s 7¼% notes due 2020 advanced by ¼ point to close at 95 bid, with over $9 million having traded.

© 2015 Prospect News.
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