Albertsons off on quarterly numbers; energy names mostly lower as crude retreats; Frontier firms

By Paul Deckelman

New York, Jan. 16 – Traders in distressed debt and in the bonds and notes of otherwise underperforming companies and sectors saw a somewhat quieter session on Tuesday, in line with a generally relaxed pace in the broader high-yield bond market as participants got back to work following a long three-day holiday weekend.

Supermarket operator Albertsons Cos., LLC’s several issues of bonds fell after it reported disappointing fiscal third-quarter results.

In the oil and natural gas arena, most sector names such as Denbury Resources Inc., Sanchez Energy Corp. and EP Energy Corp. were seen lower, in line with a retreat in crude oil prices – the first such setback after five consecutive sessions before that of crude gains. But bellwether credit California Resources Corp. managed to eke out a small gain.

Wireline telecommunications operator Frontier Communications Corp.’s recently beleaguered bonds firmed, although there was no fresh positive news seen out about the company.

Albertsons off after numbers

Traders saw Boise, Idaho-based supermarket operator Albertsons’ several issues of notes trading lower in active dealings Tuesday, with one explaining that “they had their earnings call and were active on the heels of those numbers.”

The company’s 5¾% notes due 2025 fell to 89 bid, a nearly 2-point drop from the levels just under 91 bid at which those bonds had traded during the middle of last week. More than $33 million of the notes changed hands.

Albertsons’ 6 5/8% notes due 2024 were likewise seen down 1¾ points on the day, closing at 94¼ bid, with over $11 million having traded.

The bonds retreated after Albertsons reported results for its 2017 fiscal third quarter ended Dec. 2.

Among other data points, the company reported that its net sales and other revenue of $13.6 billion remained flat for the quarter versus the year-earlier period.

While Albertsons enjoyed a big revenue boost from fuel sales at gas stations it operates of $117.6 million, and $95 million at newly opened or acquired stores, these increases were more than offset by a decrease in sales of $225.3 million attributable to a 1.8% fall in sales at stores open at least a year, a key retailing industry metric. Those identical-store sales were impacted by minimal food price inflation and pricing actions taken in response to a heightened competitive environment.

Gross profit margin decreased to 26.7% for the third quarter of fiscal 2017 compared to 28.1% a year earlier; the company said this was primarily attributable to investments in promotions and price made to respond to the competitive environment in addition to higher shrink expense partially driven by system conversions.

Adjusted EBITDA fell to $429 million from $674.8 million a year earlier, primarily reflecting lower gross profit, higher employee wage and benefit costs and deleveraging of sales on fixed costs in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016, Albertsons said.

Energy mostly off as crude declines

A fall in crude oil prices – the first after five straight sessions on the upside – helped to drag oil and gas names lower, traders said.

Among the losers were Plano, Texas-based E&P operator Denbury Resources, whose 9% notes due 2021 slid by more than ¾ point on the session to just over 104 bid, with over $16 million having traded.

Houston-based oilers Sanchez Energy and EP Energy were also both lower, with Sanchez’s 6 1/8% notes due 2023 falling ¼ point to 89¾ bid, also on around $16 million of turnover. EP’s 8% notes due 2025 were likewise off by ¼ point, at 79¾ bid, on over $12 million of volume.

But Los Angeles-based California Resources’ 8% second-lien senior secured notes due 2022 managed to hang in and actually gain 1/8 point, ending at 87½ bid, with over $12 million moving around.

Key domestic grade West Texas Intermediate for February delivery lost 57 cents per barrel in New York Mercantile Exchange dealings Tuesday, settling at $63.73, while the main international grade, March-contract North Sea Brent crude, was off by $1.11 per barrel in London futures trading, ending at $69.15

Frontier firms up

Frontier Communications’ several issues “were up a little on the day,” a trader said, seeing the Stamford, Conn.-based wireline telecommunications provider’s 11% notes due 2025 at 74¼ bid.

Another market source, who also saw the bonds finishing there, said the gain was more substantial, estimating around a 1½-point rise on the day, with over $22 million of volume.

Frontier’s 7 1/8% notes due 2023 were seen up 1 point on the day, at 67 bid, on $10 million of volume.

Its 7 5/8% notes due 2024 jumped by 1¾ points to 67½ bid.

The traders saw no fresh positive news that might explain that improvement. Frontier’s New York Stock Exchange-traded shares meantime swooned by 48 cents, or 5.78%, ending at $7.82, though on lighter-than usual volume.

© 2015 Prospect News.
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