PetSmart mixed as company preps IPO; DISH higher after posting earnings

By James McCandless

San Antonio, May 6 – A new week in the distressed debt space saw attentions paid to the retail and energy sectors.

PetSmart, Inc.’s notes finished mixed as the company prepares an initial public offering for e-commerce segment Chewy.com.

Sector peer L Brands, Inc.’s issues pushed higher.

Meanwhile, DISH Network Corp.’s paper moved up in the wake of its first-quarter earnings report.

In energy, California Resources Corp.’s paper rose after its earnings release.

As oil futures rose, Ensco Rowan plc’s and Weatherford International plc’s notes were mixed as McDermott International, Inc.’s issues rose.

Elsewhere, Dean Foods Co.’s paper improved as the company continues to explore strategic alternatives.

In the telecom space, Frontier Communications Corp.’s notes closed mixed.

PetSmart mixed, L Brands up

In retail, PetSmart’s notes closed the session mixed, traders said.

The 8 7/8% notes due 2025 added ½ point to close at 93 bid. The 5 7/8% notes due 2025, while slipping during the session to 92¾ bid, finished level at 93 bid.

The Phoenix-based pet supplies chain is preparing a $100 million initial public offering for e-commerce segment Chewy.com.

Despite that, the company plans to retain majority ownership.

The business was the subject of a drawn-out legal dispute between the name and its creditors after a large portion of Chewy.com was transferred to private equity.

“They’ve been doing a lot of work to get the creditors back into their corner,” a trader said.

A loan amendment approved last month meant that in return for creditors dropping litigation, the company would limit the amount of new debt it could take on.

Columbus, Ohio-based sector peer L Brands’ issues pushed higher.

The 6¾% notes due 2036 rose 1¼ points to close at 87 bid. The 5¼% notes due 2028 tacked on ¼ point to close at 92 bid.

DISH higher

Meanwhile, DISH’s paper headed higher, market sources said.

The 7¾% paper due 2026 picked up ¾ point to close at 90 bid. The 5 7/8% paper due 2024 gained ¼ point to close at 86¾ bid.

On Friday morning, the Englewood, Colo.-based pay-TV provider released its first-quarter earnings report.

The company met analyst predictions by showing a 65 cents per share profit.

Despite the earnings match, it also reported slightly lower than expected earnings at $3.19 billion.

“There’s too much competition and they’re not adapting fast enough,” a trader said. “It’s just another example of a market being blown up by Amazon.”

California Resources gains

In oil and gas, California Resources’ notes were rising, traders said.

The 6% notes due 2024 tacked on ¾ point to close at 67¼ bid. The 8% notes due 2022 improved by 2¼ points to close at 79¼ bid.

The Los Angeles-based independent oil and gas producer’s structure has been improving after reporting first-quarter earnings after the close on Thursday.

Earnings were pegged at 63 cents per share profit, outpacing analyst predictions of a 50 cents per share profit.

Revenues for the quarter were also well received at $690 million.

Oil names mixed

As oil futures saw modest improvements, distressed oil names presented non-uniform movements, market sources said.

London-based contract driller Ensco Rowan’s issues varied in direction.

The 7¾% notes due 2026 added ¼ point to close at 84¼ bid. The 5.2% notes due 2025 fell ½ point to close at 78½ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s paper was similarly mixed.

The 8¼% paper due 2023, while being pushed under 66 during the day, closed level at 68 bid. The 9 7/8% paper due 2024 dropped ½ point to close at 67¾ bid.

Houston-based oil and engineering name McDermott’s notes were on the rise.

The 10 5/8% notes due 2024 jumped up 2¼ points to close at 91½ bid.

West Texas Intermediate crude oil futures for June delivery rose 31 cents, finishing the day at $62.25 per barrel.

North Sea Brent crude oil futures closed the session at $71.24 per barrel after a rise of 39 cents.

Dean Foods rises

Elsewhere, Dean Foods’ issues showed improvement, traders said.

The 6½% notes due 2023 picked up 1½ points to close at 51½ bid.

The Dallas-based dairy products producer has been conducting a strategic alternatives review, with one option being to find a buyer.

“They haven’t been successful so far,” a trader said. “The main problem is there are very few companies that they could fit into.”

Frontier mixed

In the telecom sector, Frontier’s paper saw mixed results, market sources said.

The 10½% paper due 2022 lost 1 point to close at 72½ bid. The 11% paper due 2025, despite being pushed down to 65½, closed level at 66¼ bid.

The Norwalk, Conn.-based wireline communications name has seen increased attention after posting better-than-expected earnings last week.

The company reported an 18 cents per share loss where analysts had expected a 38 cents per share loss.

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