California Resources mixed post-earnings; PetSmart jumps as outlook changed

By James McCandless

San Antonio, May 3 – The distressed debt market finished the week with a continued focus on names tied to earnings releases.

California Resources Corp.’s notes were mixed after it posted its first-quarter earnings after the close on Thursday.

Oil future rose on Friday, along with Chaparral Energy, Inc. and Ensco Rowan plc’s issues while Halcon Resources Corp.’s paper trailed.

Elsewhere, in retail, PetSmart, Inc.’s notes jumped higher as a ratings agency changes its view of the name.

Neiman Marcus Group, Inc.’s issues moved in the opposite direction.

Chemicals name Hexion, Inc.’s paper was mixed. This week, the company received access to $700 million in DIP financing.

Meanwhile, drug maker Teva Pharmaceutical Industries Ltd.’s notes improved a day after the company reported earnings.

Shipping name Navios Maritime Holdings Inc.’s issues were on the rise, capping off a week of heightened attention.

Cal Res mixed

In the oil and gas space, California Resources’ notes were mixed, traders said.

The 6% notes due 2024 fell ¾ point to close at 66½ bid. The 8% notes due 2022 added 2¾ points to close at 77 bid.

After the Thursday close, the Los Angeles-based independent oil and gas producer released its first quarter earnings report.

The company showed a 63 cents per share profit, beating analyst expectations of 50 cents per share.

It also surpassed revenue predictions with $690 million for the quarter.

“It’s a microcosm of oil’s position right now,” a trader said.

Oil futures up

Elsewhere in the sector, distressed oil tranches were mostly as positive as oil futures, market sources said.

Oklahoma City, Okla.-based producer Chaparral’s issues ended the day better.

The 8¾% notes due 2023 rose ¾ point to close at 74¾ bid.

London-based contract driller Ensco Rowan’s paper was also on an upward trend.

The 7¾% paper due 2026 picked up ½ point to close at 84 bid. The 5.2% paper due 2025 gained 1 point to close at 79 bid.

Houston-based sector peer Halcon Resources’ notes ended negative.

The 6¾% notes due 2025 dropped 1¾ points to close at 63½ bid.

West Texas Intermediate crude oil futures for June delivery gained 13 cents to finish the session at $61.94 per barrel.

North Sea Brent crude oil futures for July delivery closed at $70.85 per barrel after a 10 cent rise.

PetSmart jumps

Meanwhile, in retail, PetSmart’s issues jumped higher, traders said.

The 8 7/8% notes due 2025 rose 2½ points to close at 92½ bid. The 5 7/8% notes due 2025 tacked on ¾ point to close at 93 bid.

On Friday, S&P Global Ratings revised its outlook on the Phoenix-based pet supplies chain from negative to developing, citing the company’s potential ability to pay back lenders with proceeds from the future IPO of e-commerce arm Chewy.com.

The company announced the move on Monday.

Dallas-based sector peer Neiman Marcus’ paper traded in the opposite direction.

The 8% paper due 2021 dropped 1¼ points to close at 53 bid.

The company is currently conducting a review of options for its e-commerce segment MyTheresa, with the option of a sale included.

Hexion mixed

Hexion’s notes were mixed in Friday trading, market sources said.

The 6 5/8% notes due 2020 rose 2¼ points to close at 79 bid. The 9% notes due 2020 shed ¾ point to close at 16¼ bid.

On Wednesday, the Columbus, Ohio-based chemicals producer received final approval in bankruptcy court to access the full $700 million in debtor-in-possession financing, Prospect News reported.

Interest on the $350 million 18-month DIP term loan was set last month at Libor plus 275 basis points with a 0% Libor floor, and interest on the $350 million 18-month DIP revolver will range from Libor plus 200 bps to Libor plus 250 bps, based on availability.

The company filed for bankruptcy last month as it faced $67 million in interest payments on its bonds.

Teva improves

In the pharmaceuticals space, Teva’s issues saw an improvement, traders said.

The 4.1% notes due 2046 gained ¾ point to close at 71½ bid. The 3.15% notes due 2026 added 1¾ points to close at 85¼ bid.

The Petach Tikva, Israel-based generic drug maker released its first-quarter earnings report on Thursday, highlighting a mixed outcome.

Where analysts were expecting a 58 cents per share profit, the company reported a 60 cents per share profit.

Blaming a tightening sector and less than stellar sales of a flagship drug, it also reported $4.3 billion in revenues.

Navios rises

Navios’ paper was on the rise in Friday’s session, market sources said.

The 7 3/8% paper due 2022 moved up 1¼ points to close at 69¼ bid.

The Monaco-based shipping name saw heightened activity throughout the week, though no news was related to it.

© 2015 Prospect News.
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