Ensco, Rowan notes gain after clearing regulatory hurdle; Ultra Petroleum up despite ratings downgrade

By James McCandless

San Antonio, Nov. 21 – On the day before the Thanksgiving holiday in the United States, the distressed space saw a recovery as volume remained steady.

Ensco plc and Rowan Cos. plc’s notes gained after both companies announced that U.S. regulators have terminated the waiting period to allow them to merge.

Elsewhere in energy, Ultra Petroleum Corp.’s issues gained despite a ratings downgrade late Tuesday.

Sable Permian Resources, LLC’s notes traded up after steep drops on Tuesday.

California Resources Corp. and Sanchez Energy Corp.’s paper also improved.

In retail, L Brands, Inc.’s issues were mixed in Wednesday’s session after releasing its third-quarter earnings Tuesday. J.C. Penney Co., Inc.’s paper fell.

Meanwhile, telecom name Altice Europe NV’s notes rose despite a disappointing earnings release.

Domestic peer Frontier Communications Corp.’s issues also rose.

Ensco, Rowan gain

Ensco’s notes gained Wednesday, traders said.

The 7¾% notes due 2026 added ¼ point to close at 83½ bid. The 5.2% notes due 2025 rose 2½ points to close at 76½ bid.

On Tuesday, the London-based contract driller announced that the waiting period of its merger with Rowan that had been imposed by the Department of Justice and the Federal Trade Commission had been terminated early.

The company’s notes have been on a downward trend since the $2.38 billion acquisition was announced.

Houston-based peer Rowan’s issues were also rising.

The 7 3/8% notes due 2025 edged up ¼ point to close at 89¼ bid. The 4¾% notes due 2024 rose 1 point to close at 82 bid.

“It’s not the end of the road for them, but it’s a good step,” a trader said.

Ultra Petroleum up

Meanwhile, Ultra Petroleum’s paper improved, market sources said.

The 7 1/8% notes due 2025 picked up 2 points to close at 46 bid.

Late Tuesday, Moody’s Investors Service downgraded the Houston-based independent oil and gas producer’s corporate family rating and issue-level ratings and affirmed a negative outlook.

“I think [Ultra Petroleum] has been flying under the radar recently,” a trader said.

Elsewhere in the energy space, Houston-based peer Sable Resources’ notes traded up.

After some trading post-close Tuesday, the 7 1/8% notes due 2020 opened at 44¼ bid, ending the day 3¾ points higher at 48 bid.

On Tuesday, the 8% notes due 2020 dropped 8¾ points and the 7 1/8% notes lost 3 points on reports of the private company releasing earnings.

A rise in oil futures spurred improvements in bellwether oil tranches.

Los Angeles-based producer California Resources’ 6% notes due 2024 gained 3 points to close at 77 bid.

Houston-based peer Sanchez Energy’s 6 1/8% paper due 2023 picked up 2¼ points to close at 36½ bid.

West Texas Intermediate crude oil futures were positive Wednesday, rising 10 cents to close the session at $54.73 per barrel. Brent North Sea crude futures jumped up 95 cents to close at $63.48 per barrel.

L Brands mixed

In retail, L Brands’ notes were mixed, traders said.

The 5¼% notes due 2028 rose 1¾ points to close at 87 bid. The 6¾% notes due 2036 lost 1¼ points to close at 81½ bid.

On Tuesday, the 5¼% notes lost 3¼ points and the 6¾% notes fell 1 point.

The Columbus, Ohio-based retailer issued its third-quarter earnings report on Tuesday, which highlighted a 16 cents per share profit versus a 15 cents per share expectation.

The market pounced on the company’s coinciding announcement that it would cut its quarterly dividend from $2.40 to $1.40.

Plano, Texas-based department store chain J.C. Penney’s 8 5/8% notes due 2025 fell 1½ points to close at 58 bid.

Altice higher

Altice’s paper traded higher, market sources said.

The 7 5/8% paper due 2025 gained 2¼ points to close at 79¾ bid.

The Amsterdam-based telecom name released its third-quarter results on Wednesday, which yielded mixed results.

The company reported a jump in cable television subscribers in France and remained confident about its position for growth in the coming year.

Despite the optimism, the company reported a 6.1% fall in revenue and a 10.4% reduction in EBITDA.

Executives also expressed interest in selling part of its cable network in an effort to reduce its $34 billion in debt.

On the domestic side, Norwalk, Conn.-based wireline telecom company Frontier’s notes traded higher.

The 7 5/8% notes due 2024 jumped 5 points to close at 56¼ bid. The 10½% notes due 2022 rose ¾ points to close at 77 bid. The 11% notes due 2025 added ¼ point to close at 69¼ bid.

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