Windstream higher as Uniti lease in question; PetSmart declines in retail

By James McCandless

San Antonio, June 18 – Telecom and retail names took much of the attention in the distressed space on Tuesday.

Windstream Holdings, Inc.’s notes were moving higher as a bankruptcy court extended the deadline to make a decision on whether to keep a lease.

Sector peer Frontier Communications Corp.’s issues finished mixed.

Meanwhile, in retail, PetSmart, Inc.’s paper declined after riding a high as it prepped the initial public offering for Chewy, Inc.

L Brands, Inc., another retailer, saw its notes trade mixed.

In energy, Hi-Crush Partners LP’s issues rose with oil futures as Ensco Rowan plc’s and California Resources Corp.’s paper was mixed.

Elsewhere, in pharma, Teva Pharmaceutical Industries Ltd.’s notes were mixed as Endo International plc’s issues gained.

Windstream up, Frontier mixed

In telecom, Windstream’s notes were higher throughout the day, traders said.

The 10½% notes due 2024 gained 1½ points to close at 75¼ bid. The 7¾% notes due 2021 garnered 2 points to close at 29½ bid.

On Monday, news broke that, in bankruptcy court, the Little Rock, Ark.-based rural communications name had received more time to evaluate its contract with real estate investment trust Uniti.

With creditors, the company plans to decide if it should keep or reject the contract.

Uniti rents out the broadband network that Windstream uses to service customers.

“Someone probably made a stink about not getting enough value,” a trader said.

The name filed for bankruptcy in February 2019 after losing a court battle against Aurelius Capital Management on whether it defaulted on its bonds in 2015.

Norwalk, Conn-based wireline communications name Frontier’s issues finished mixed.

The 10½% notes due 2022 added ¼ point to close at 66½ bid. The 11% notes due 2025, despite being pushed down to 60 bid, ended up back at the previous day’s level of 61¾ bid.

PetSmart off, L Brands mixed

Meanwhile, in retail, PetSmart’s paper saw another decline, market sources said.

The 8 7/8% paper due 2025 dipped 2¼ points to close at 96¼ bid. The 5 7/8% paper due 2025 shaved off ¼ point to close at 96¾ bid.

On Monday, the 8 7/8% paper lost 1 point and the 5 7/8% paper lost ½ point.

The losses were the end of a four-day rise for the Phoenix-based pet supplies chain as the market anticipated an IPO for e-commerce segment Chewy.com.

The Friday IPO netted the company more than $1 billion.

“I think there’s a floor for PetSmart in the lower 90’s,” a trader said. “But that all depends on Chewy continuing to perform.”

Columbus, Ohio-based retailer L Brands’ notes saw a mixed day.

The 6¾% notes due 2036 gained 2½ points to close at 88¼ bid. The 5¼% notes due 2028 held level at 89 bid.

Oil names mixed

While oil futures rose, top distressed energy tranches skewed mixed, traders said.

Houston-based energy logistics company Hi-Crush’s issues improved.

The 9½% notes due 2026 improved by 2½ points to close at 68¾ bid.

London-based contract driller Ensco Rowan’s paper was mixed.

The 5.2% notes due 2025 shifted down ½ point to close at 66¼ bid. The 7¾% notes due 2026 rose ½ point to close at 71 bid.

Los Angeles-based independent oil and gas producer California Resources’ notes were also mixed.

The 6% notes due 2024 shed 3 points to close at 60 bid. The 8% notes due 2022 picked up 1½ points to close at 68¼ bid.

West Texas Intermediate crude oil futures for July delivery gained $1.97 to end the session at $53.90 per barrel.

North Sea Brent crude oil futures for August delivery closed at $62.14 per barrel after a $1.20 rise.

Teva mixed, Endo gains

In the pharma space, Teva’s issues finished the session mixed, market sources said.

The 3.15% notes due 2026 added ¼ point to close at 77¾ bid. The 4.1% notes due 2046 fell ¾ point to close at 67 bid.

The Petach Tikva, Israel-based generic drugmaker has been subject to intense analyst scrutiny as the market becomes wary of its legal exposure after settling a case for $85 million in Oklahoma.

“This opioid stuff will be a weight on the sector for years,” a trader said.

Dublin-based peer Endo’s paper saw a gain.

The 6% notes due 2023 improved by ¾ point to close at 74½ bid.

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