Distressed names actively traded but largely unchanged; energy dominates again

By James McCandless and Paul Deckelman

San Antonio, Jan. 25 – Oil, natural gas and other energy companies continued to be heavily traded in what was otherwise described by traders as a slow day in the distressed debt market.

The energy names were continuing to react to Wednesday’s oil industry news, while oil prices tapered off on the day.

This led to another active day for Denbury Resources Inc. and California Resources Corp., which saw gains in their notes.

For a second straight day, paper from Armstrong Energy Inc. and Murray Energy Corp. continued its gains in the wake of Wednesday’s announcement that Armstrong would sell much of its assets to Murray Energy subsidiary Murray Kentucky. Armstrong also sought an extension of its right to exclusively file a reorganization plan.

In the telecom space, Frontier Communications Corp. saw its notes rise on the news that amendments to its credit agreements were made official. Communications satellite company Intelsat SA remained active but mixed.

Retailers Sears Holdings Corp. and J.C. Penney Co. Inc.’s notes declined further as recent negative news took its toll.

Energy issues climb again

Energy company debt remained active on Wednesday’s positive oil comments from Saudi Arabian representatives at the World Economic Forum in Davos, Switzerland, according to a trader.

Principally, Denbury Resources generated a lot of activity. The Plano, Texas-based oil and natural gas company saw its 6 3/8% notes due 2021 shoot up 1½ points to 86½ bid while its 5½% notes due 2022 shaved off ¼ point to close at 78½.

Elsewhere, California Resources, which a trader described as a bellwether name in the underperforming energy space, was also heavily traded as its 6% notes due 2024 continued to hover around 76½ bid. Its 8% notes due 2022 shot up almost 2 points to end at 89 bid.

Coal notes continue gains

In the coal-mining area, Armstrong Energy’s notes were still gaining in response to Wednesday’s asset-sale news. The company additionally asked the bankruptcy court overseeing its Chapter 11 case for an extension of the time when it has exclusivity in filing a reorganization plan (see related story elsewhere in this issue).

The St. Louis-based coal company’s 11¾% notes due 2019 rose just over 2 points from under 19 to end at 21 bid, on top of Wednesday’s nearly 3 point gain.

Meanwhile, St. Clairsville, Ohio-based sector peer Murray Energy’s 11¼% notes due 2021 gained more than 2 points to finish at just over 54½ bid.

On Wednesday, Murray and Armstrong announced that Murray had agreed to take a 51% stake in a new company that will hold some assets formerly held by Armstrong Energy; the latter company’s secured noteholders will own the other 49% of the new entity.

Frontier loan changes official

Frontier Communications announced Thursday that amendments to its credit agreements where made official as the company seeks greater flexibility in handling its debt (see related story elsewhere in this issue).

According to a market source, this continued the Norwalk Conn.-based wireline telecom company’s streak of having some of the market’s heaviest trading activity.

Its 7 5/8% notes due 2024 jumped up more than a point during trading Thursday to end at 68¾ bid. The 11% notes due 2025 rose more than 1¼ points to end at just over 78½ bid, although its 10½% notes due 2022 fell slightly to just above 83¼ bid.

Intelsat still heavily traded

Another telecom name experiencing high volume trading was Luxembourg-based communications satellite operator Intelsat SA, according to a trader.

Its Intelsat Jackson Holdings SA’s 7¼% notes continued their decline, posting a ½ point drop to end at 86¾ bid.

Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 dropped to just above 44 bid while its 7¾% notes due 2021 rose over 1 point to finish at just over 47 bid.

Retailers see more losses

On news earlier this week that Hoffman Estates, Ill.-based retailer Sears Holdings would offer private exchanges for two of its series of notes – which was described by a trader as a way of holding off bankruptcy – the affected notes continued to fall.

Sears’ 8% notes due 2019 fell to 47¾ bid and its 6 5/8% notes due 2018 finished near 82¾ bid.

Plano, Texas-based department store chain operator J.C. Penney also saw losses, according to a trader. Its 7.4% notes due 2037 ended at 72½ bid.

A trader described the day of distressed trading on the whole as firm but even-handed.

“I think the volume was okay as far as trading – but there was not a lot of movement,” the trader said. “There was a lot that went unchanged.”

© 2015 Prospect News.
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