PetSmart better on Chewy IPO; Frontier lower amid restructure talk

By James McCandless

San Antonio, June 14 – The distressed space ended Friday with its attentions fixed on news-driven names.

PetSmart, Inc.’s notes ended better after the launch of its initial public offering for e-commerce name Chewy.com.

Sector peer L Brands, Inc.’s issues were in decline.

Meanwhile, telecom name Frontier Communications Corp.’s paper was lower as the market chatters about a potential restructure.

Satellite name Intelsat SA’s notes were mixed.

Drugmaker Teva Pharmaceutical Industries Ltd.’s issues also finished mixed, capping off another week of scrutiny over its potential legal exposure.

Mallinckrodt plc’s paper ended the day mixed.

Oil futures trended upward as Halcon Resources Corp.’s notes followed suit, California Resources Corp.’s issues were mixed and Ensco Rowan plc’s paper fell.

PetSmart better, L Brands down

PetSmart’s notes ended the week on better footing, traders said.

The 8 7/8% notes due 2025 rose ½ point to close at 99½ bid. The 5 7/8% notes due 2025 picked up ¾ point to close at 97½ bid.

On Friday, the Phoenix-based pet supplies retailer’s structure saw a boost as its e-commerce segment Chewy.com launched its IPO.

The company raised more than $1 billion as its stock soared as high as 86%.

“They’ve beat all their targets for this,” a trader said. “But, we’ll see if that’s sustainable.”

Columbus, Ohio-based retailer L Brands’ issues were in decline.

The 6¾% notes due 2036 fell 3 points to close at 85 bid. The 5¼% notes due 2028 shaved off ¼ point to close at 88½ bid.

Frontier lower, Intelsat mixed

Meanwhile, in telecom, Frontier’s paper was moving lower, market sources said.

The 10½% notes due 2022 dropped ¼ point to close at 67 bid. The 11% notes due 2025 lost ¼ point to close at 62 bid.

Throughout Friday, talk intensified over the Norwalk, Conn.-based wireline communications company and its potential restructure.

“There’s a lot of talk about restructuring and what creditors want if that happens,” a trader said. “Apparently everything’s in the air right now. But the point is that they’re saddled with too much debt.”

Recently, the company added members to its board of directors who hold restructuring experience.

The company has $2.7 billion in bonds that mature in 2022.

Luxembourg-based satellite operator Intelsat’s notes were mixed.

Intelsat Jackson Holdings SA’s 5½% notes due 2023, while heading down to 89 bid during the day, ended back level at 90 bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 slid 3½ points to close at 75½ bid.

Teva, Mallinckrodt mixed

In pharma, Teva’s issues finished the session mixed, traders said.

The 3.15% notes due 2026 lost ½ point to close at 79¼ bid. The 4.1% notes due 2046 tacked on ¼ point to close at 67½ bid.

This week, the Petach Tikva, Israel-based generic drug maker continued to receive more pressure as the market weighed its potential legal exposure.

Analysts have been saying that if more litigation is brought over the company’s involvement in the opioid epidemic, it could result in billions in payouts.

Concurrently, it received more negative attention after its $85 million settlement with Oklahoma was caught in an administrative snag.

Staines-upon-Thames, England-based peer Mallinckrodt’s paper was similarly mixed.

The 5 5/8% paper due 2023 picked up ½ point to close at 73¾ bid. The 5¾% paper due 2024 moved down ½ point to close at 84½ bid.

Oil names mixed

Despite another day of improving oil futures, distressed energy tranches were not as cohesive, market sources said.

Houston-based independent oil and gas producer Halcon Resources’ notes gained.

The 6¾% notes due 2025 tacked on 3¼ points to close at 29¼ bid.

Los Angeles-based sector peer California Resources’ issues were mixed.

The 6% notes due 2024 fell 1 point to close at 58 bid. The 8% notes due 2022 closed level at 69¼ bid.

London-based contract driller Ensco Rowan’s paper finished negative.

The 5.2% paper due 2025 gave back 1½ points to close at 68 bid. The 7¾% paper due 2026 lost ½ point to close at 72½ bid.

West Texas Intermediate crude oil futures for July delivery saw a 23-cent raise to end the week at $52.51 per barrel.

North Sea Brent crude oil futures for August delivery ended the afternoon at $62.01 per barrel on a 70-cent gain.

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