Rite Aid notes gain despite delisting warning; California Resources issues lead oil rally

By James McCandless

San Antonio, Jan. 4 – The end of the week in the distressed space saw a rally largely pinned to oil gains.

Rite Aid Corp.’s notes ended higher despite the company having received a delisting warning from the New York Stock Exchange on Friday.

Sector peers Neiman Marcus Group, Inc. and Revlon, Inc.’s issues also improved.

In oil and gas, California Resources Corp.’s paper spiked after oil futures ended the session higher again.

The rally also boosted Whiting Petroleum Corp., Rowan Cos. plc and Bristow Group Inc.’s notes.

In the pharmaceutical space, Bausch Health Cos.’s issues were higher as the company gained the ability to bid on a bankrupt company’s assets.

Teva Pharmaceutical Industries Inc.’s paper was also improving.

Rite Aid rises

Rite Aid’s notes ended the Friday session higher, traders said.

The 6 1/8% notes due 2023 picked up 3 points to close at 81 bid. The 7.7% notes due 2027 added ½ point to close at 67 bid.

On Friday morning, the Camp Hill, Pa.-based drug store retailer received a delisting warning from the New York Stock Exchange after its common stock traded under $1 for the last month.

The company’s notes were under pressure during the second half of 2018 after Rite Aid nixed a proposed merger with grocery giant Albertsons.

“Rite Aid’s had a bumpy ride in the past 6 months,” a trader said. “I think there’s a potential to stabilize this year. We’ll see what the first few quarters brings.”

Meanwhile, Dallas-based luxury retailer Neiman Marcus’ issues were also gaining.

The 8% notes due 2021 rose 3 points to close at 44 bid.

The company is currently embroiled in a dispute with its creditors over its private equity transfer of e-commerce arm MyTheresa.

The company and one of its largest creditors are suing each other over the transfer, which has been a contentious subject that has stalled restructuring talks.

New York City-based cosmetics producer Revlon’s paper followed the positive trend.

The 5¾% paper due 2021 jumped 4 points to close at 80½ bid. The 6¼% paper due 2024 added 2¾ points to close at 55¼ bid.

CalRes spikes

In the energy space, California Resources’ notes traded higher, market sources said.

The 6% notes due 2024 gained 3½ points to close at 66¼ points. The 8% notes due 2022 shot up 6 points to close at 77 bid.

The Los Angeles-based independent oil and gas producer’s notes, widely considered bellwethers for the oil market, were swept up in a day of optimism over U.S. crude supplies and overall improving market sentiment.

“Virtually everything got a bit of a late Christmas present today,” a trader said. “It looks like we’re set oil to get back to comfortable levels.”

Elsewhere, Denver-based producer Whiting Petroleum’s issues were also rising.

The 6 5/8% notes due 2026 trended upward 4½ points to close at 92½ bid.

Houston-based contract driller Rowan’s 4 7/8% paper due 2022 gained 1 point to close at 84½ bid. The 4¾% paper due 2024 rose 5 points to close at 78¾ bid.

Houston-based offshore aviation name Bristow’s 6¼% notes due 2022 added 2¼ points to close at 40 bid.

At the end of the Friday session, West Texas Intermediate crude oil futures for February gained 87 cents to close at $47.96 per barrel.

North Sea Brent crude futures settled at $57.06 per barrel after rising $1.11.

Bausch up

Meanwhile, Bausch’s issues improved, traders said.

Its VRX Escrow Corp. 6 1/8% notes due 2025 tacked on 1 point to close at 91 bid.

On Friday, the Laval, Canada-based drug maker received positive attention after news broke that bankrupt Synergy Pharmaceuticals won authorization in court to advance in the proposed sale of two gastrointestinal drugs and other assets to Bausch.

The move came after a two-week delay imposed in bankruptcy court.

Petach Tikva, Israel-based generic drug maker Teva’s paper also saw a rise on Friday.

The 2.8% paper due 2023 picked up 2 points to close at 88¼ bid. The 3.15% paper due 2026 rose 2½ points to close at 81¼ bid.

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