L Brands declines after lagging holiday sales; PG&E mixed on third day of high volume

By James McCandless

San Antonio, Jan. 10 – After a sluggish start on Thursday morning, the distressed space ended mostly higher.

L Brands, Inc.’s notes fell after the retailer reported relatively low sales in its stores over the holiday shopping season.

Department store chain J.C. Penney Co., Inc.’s issues rose a day after posting holiday sales.

Sector peer PetSmart, Inc.’s paper was also lower while Revlon, Inc.’s notes ended mixed.

PG&E Corp.’s issues were mixed on a third day of high volume and increased scrutiny as Moody’s Investors Service issued a downgrade.

Another nudge upward in oil futures did not translate to distressed oil names, showing mixed results for California Resources Corp.’s, Ensco plc’s and Denbury Resources Inc.’s paper.

Chemicals name Hexion Inc.’s paper was also mixed on market speculation.

L Brands lower

L Brands’ notes were lower on Thursday, traders said.

The 5¼% notes due 2028 dropped ¾ point to close at 87½ bid. The 6¾% notes due 2036 lost ¼ point to close at 85¾ bid.

On Thursday, the Columbus, Ohio-based retailer reported a 1.6% drop in the 2018 holiday shopping season compared to the same period in 2017.

The owner of Victoria’s Secret, Bed, Bath & Beyond and others listed $2.52 billion in sales.

“Just like J.C. Penney, things are falling into place in the sector but there’s nothing final yet,” a trader said. “A lot of people are holding off on these names until the end of Q1.”

As regards J.C. Penney, the Plano, Texas-based department store chain’s issues were rising.

The 8 5/8% notes due 2025 gained ¾ point to close at 59 bid.

The company reported a 3.5% drop in 2018 holiday sales in comparison to the previous year.

Meanwhile, Phoenix-based pet supplies retailer PetSmart’s paper also declined.

The 8 7/8% notes due 2025 shaved off ¼ point to close at 64 bid. The 5 7/8% notes due 2025 fell ½ point to close at 78¼ bid.

New York City-based cosmetics producer Revlon’s notes were mixed.

The 5¾% notes due 2021 moved up 1½ points to close at 83½ bid. Conversely, the 6¼% notes due 2024 took off 1½ points to close at 56¾ bid.

PG&E mixed

PG&E’s issues were mixed on a third day of high-volume trading, market sources said.

The 3.3% notes due 2027 jumped ¾ point to close at 81¼ bid. The 6.05% notes due 2034 dropped 4 points to close at 85½ bid. The 3½% notes due 2020 fell 2¾ points to close at 88¾ bid.

The San Francisco-based electric utility company entered a third day of heavy trading, with the top three tranches combining for $252 million of the bonds on the tape.

“It’s got everyone’s attention but it’s not exactly clear what’s next for them,” a trader said. “There’s a lot of moving parts that should settle soon, but the bonds are here to stay, in terms of distressed trading.”

After the close on Thursday, Moody’s lowered the company’s senior unsecured rating and its short-term rating for commercial paper.

It also lowered the ratings for subsidiary Pacific Gas & Electric Co.

The move follows Tuesday’s action by S&P Global Ratings to downgrade the issuer credit ratings and short-term ratings for the company and its subsidiary.

CalRes, sector mixed

In the oil and gas space, California Resources’ paper was mixed, traders said.

The 8% paper due 2022 lost 1¾ points to close at 81½ bid. The 6% paper due 2024 held level at 72 bid.

Another positive day in oil futures did not fully translate to the Los Angeles-based independent oil and gas producer’s benchmark tranches.

London-based contract driller Ensco’s notes were seen declining.

The 7¾% notes due 2026 fell 1¼ points to close at 81 bid.

Houston-based sector peer Denbury’s issues were also mixed.

The 5½% notes due 2022 were flat at 73¼ bid. The 6 3/8% notes due 2021 dropped 2 points to close at 80 bid.

West Texas Intermediate crude oil futures for February delivery added 23 cents to close the session at $52.59 per barrel.

North Sea Brent crude futures ended at $61.68 per barrel after rising 24 cents.

Hexion mixed

Hexion’s paper was mixed, market sources said.

The 6 5/8% paper due 2020 was level at 84¾ bid. The 9% paper due 2020 added ¼ point to close at 49¼ bid.

The Columbus, Ohio-based chemicals producer saw its notes increase in volume on market chatter about the company’s next move.

“There’s talk that they’re exploring some kind of sale,” a trader said. “That’s got everyone’s attention, at least what attention they can give with PG&E floating around.”

The paper has been under pressure recently after news broke that second-lien holders were organizing in preparation for potential debt talks concerning 2020 maturities.

© 2015 Prospect News.
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