Bed Bath & Beyond falls amid investor pressure; Adient loses as new issue trades

By James McCandless

San Antonio, April 26 – Oil and retail names were the focus of the distressed debt space as the week came to an end, as they were for much of the week.

Bed Bath & Beyond, Inc.’s notes fell after a group of activist investors renewed efforts to force the company to replace its chief executive officer.

Sector peer PetSmart, Inc.’s issues were mixed while Neiman Marcus Group, Inc.’s paper improved.

Elsewhere, Adient plc’s notes lost by the end of the day as a subsidiary’s new issue of seven-year senior secured notes began trading.

In oil and gas, Superior Energy Services, Inc.’s issues continued to trend negative in the wake of its earnings report.

A significant dip in oil futures begot similar movements for California Resources Corp., Ensco Rowan plc, and Chaparral Energy, Inc.’s paper.

Meanwhile, in telecom, Intelsat SA’s notes were on an upward trend.

Retail mixed

Bed Bath & Beyond’s notes were falling in the Friday session, traders said.

The 5.165% notes due 2044 lost 2½ points to close at 74½ bid. The 4.915% notes due 2034 declined by 2¼ points to close at 76¼ bid.

The Union, N.J.-based retail name’s structure was pushed lower as activist investors renewed calls for the company to make management changes.

The group, comprising three major shareholders, again called for the resignation of chief executive officer Steven Temares and its entire board of directors.

When the company appointed five new board members on Monday, the company said that the group declined to contribute to the selection process.

The group also outlined plans for cost cutting and improving inventory management to improve the company’s profitability.

“From what’s happened in the last month or so, I would say that they just want to make noise,” a trader said.

Meanwhile, Phoenix-based sector peer PetSmart’s issues were mixed.

The 8 7/8% notes due 2025, while trading as low as 82½ bid, closed level at 83 bid. The 5 7/8% notes due 2023 added ¼ point to close at 87¼ bid.

Dallas-based luxury retailer Neiman Marcus’ paper saw a better day.

The 8% notes due 2021 tacked on ¼ point to close at 63 bid.

Adient loses

Elsewhere, Adient’s notes lost during the day’s activity, market sources said.

The 4 7/8% notes due 2026 shaved off ¾ point to close at 82¼ bid.

On Friday, a new upsized $800 million issue of seven-year senior secured notes priced by a subsidiary of the Dublin-based car parts manufacturer became free to trade.

Upsized from an initial $750 million, the name saw increased attention at the tail end of the week.

“They’re trying to execute a turnaround,” a trader said. “They got a lot of attention this week.”

Superior Energy negative

In the oil and gas space, Superior Energy’s issues ended the day negative, traders said.

The 7¾% notes due 2024 dropped 1¼ points to close at 73¼ bid.

Earlier this week, the Houston-based oilfield services provider disappointed the market with its first-quarter earnings report.

It reported a loss of 31 cents per share, falling short of analyst predictions of a 24 cents per share loss.

Oil futures dip

A significant drop in oil futures led to similar movements for distressed oil names, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ paper declined.

The 8% paper due 2022 lost 2¾ points to close at 76½ bid. The 6% paper due 2024 moved lower by 1 point to close at 68 bid.

The company faced a sell-off of its equity this week, causing more trading in an already active structure.

London-based contract driller Ensco Rowan’s notes were similarly worse off.

The 7¾% notes due 2026 lost ¾ point to close at 87½ bid. The 5.2% notes due 2025 dropped 1 point to close at 80½ bid.

Oklahoma City, Okla.-based producer Chaparral’s issues followed suit.

The 8¾% notes due 2023 fell 1 point to close at 75 bid.

West Texas Intermediate crude oil futures for June delivery lost $1.91 to finish the day at $63.30 per barrel.

North Sea Brent crude oil futures for June delivery landed at $72.15 per barrel at the end of the session after a $2.20 drop.

Intelsat up

In the telecom space, Intelsat’s paper spent Friday on an upward trend, traders said.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 gained ½ point to close at 90¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 added 1¼ points to close at 78¼ bid.

The Luxembourg-based satellite operator, a perennial trader in the distressed space, has remained in the spotlight as the U.S. government tangles over issues with the C-band spectrum.

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