J.C. Penney notes higher on CEO news; Intelsat gains after new issue; energy names up

By James McCandless

San Antonio, Oct. 3 – The distressed debt market saw broad gains across several sectors on Wednesday.

J.C. Penney Co., Inc.’s notes gained after news broke late Tuesday that the company had selected a new chief executive officer.

Sector peer Neiman Marcus Group, Inc.’s issues were also up amid chatter that the company is in talks with creditors to amend its credit agreement.

Meanwhile, pet retailer PetSmart, Inc.’s paper was active but ended mixed.

Elsewhere, in the telecom space, Intelsat SA’s notes were moving higher a day after subsidiary Intelsat Jackson SA priced a $700 million issue. Frontier Communications Corp.’s tranches were gaining across the board.

Another rise in oil futures led to oil and gas names strengthening their positions again, with bellwethers improving for Sanchez Energy Corp., California Resources Corp. and Denbury Resources Inc.

FirstEnergy Solutions Corp.’s paper continues to trade higher after getting its bankruptcy plan approved in court last week.

J.C. Penney higher

J.C. Penney’s notes rose on Wednesday, traders said.

The 8 5/8% notes due 2025 climbed 1¼ points to close at 69¾ bid. The 7 5/8% bonds due 2097 picked up 2½ points to end at 42¾ bid.

After the close on Tuesday, the company announced the appointment of Jill Soltau as its new chief executive officer, replacing Marvin Ellison after his departure in May.

For the past three years, Soltau was the CEO of Jo-Ann Stores, Inc.

The Plano, Texas-based department store chain’s notes have been under pressure since Ellison’s resignation, compounded by a dismal second quarter and the subsequent resignation of its chief financial officer.

“This is probably a short-term bump,” a trader said.

Elsewhere, sector peer Neiman Marcus’ issues rose.

The 8% notes due 2021 added ¼ point to close at 66 bid. The 7 1/8% notes due 2028 also gained ¼ point to close at 82¼ bid.

News broke in the afternoon that the company has opened talks with its creditors about the possibility of amending its credit agreement.

The Dallas-based luxury retailer’s issues have been trading in the mid-80’s since putting out a mixed earnings report on Sept. 18, showing an increasing debt load.

Creditors were also concerned about the recent equity transfer of e-commerce arm MyTheresa into private hands, with a major debt investor claiming the company was in default as a result.

Meanwhile, pet supplies retailer PetSmart’s paper was mixed.

The 5 7/8% paper due 2025 lost ¼ point to close at 82½ bid. The 8 7/8% paper due 2025 gained ½ point to close at 74½ bid.

Telecoms gain

Intelsat’s notes were seen improving, market sources said.

Intelsat Jackson’s 5.5% notes due 2023 picked up ½ point to close at 93 bid. The Intelsat (Luxembourg) SA 8 1/8% notes due 2023 rose ¾ point to close at 91½ bid.

On Tuesday, subsidiary Intelsat Jackson priced a $700 million add-on to its 8½% senior notes due Oct. 15, 2024.

The Luxembourg-based satellite communications provider has maintained a positive trend since hitting a year-to-date low in February. The 5½% notes saw a floor at 75¾ bid and the 8 1/8% notes landed at about 40½ bid.

Frontier, the Norwalk, Conn.-based wireline company and distressed telecom name, saw higher movement as well.

The 7 5/8% notes, while reaching levels as high as 65¾ in intraday trading, settled back down at 65 bid. The 10½% notes due 2022 rose 1 point to close at 90¼ bid. The 11% notes due 2025 picked up 1¾ points to close at 80¾ bid.

“It looked like Frontier saw a short squeeze today,” a trader said.

Energy sector bolstered

Bellwether tranches in distressed oil names continued to move higher this week as crude oil futures saw more increases.

Houston-based independent oil and gas producer Sanchez Energy saw its 6 1/8% paper due 2023 trade up ¼ point to close at 60¼ bid.

On Tuesday, the 6 1/8% paper picked up 2 points.

Los Angeles-based peer California Resources’ 6% notes due 2024 rose about 1¾ points to close at around 91 bid. The 8% notes due 2022 jumped up 1 point to close at 97 bid.

On Tuesday, the 6% notes rose 2¼ points and the 8% notes added ¾ point.

Plano, Texas-based Denbury Resources’ 5½% paper due 2022 gained 2 points to close at 95 bid.

“Energy across the board was pretty strong, especially in those go-go names,” a trader said.

West Texas Intermediate crude oil futures ended $1.18 higher at $76.41, again ending at its highest level in four years. North Sea Brent crude oil futures were up $1.49 to end the session at $86.29.

The Energy Information Administration reported an 8 million barrel jump in U.S. crude oil inventories on Wednesday, representing the biggest increase since March 2017.

FirstEnergy improves

FirstEnergy Solutions notes were trading higher, traders said.

The 6.05% notes due 2021 gained 3 points to close at 76½ bid.

The notes started a positive streak on Sept. 27 after a bankruptcy plan between the company and its parent, FirstEnergy Corp., was given court approval.

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