Digicel drops after earnings miss; PetSmart better as debt upgraded; Rite Aid better

By James McCandless

San Antonio, June 28 – Distressed debt trading centered on the telecom and retail sectors on Friday.

Digicel Group Ltd.’s notes saw a drop as bondholders become increasingly concerned about the company’s earnings and debt load.

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

Elsewhere, retailer PetSmart, Inc.’s paper closed better as a ratings agency issued an upgrade to its debt.

Drug store name Rite Aid Corp.’s notes gained again as the market continues to react to its new partnership with Amazon.com, Inc. and its latest earnings.

In oil and gas, Ensco Rowan plc’s issues were active but level as a ratings agency affirmed the company’s ratings.

As oil futures end mixed, California Resources Corp. and Weatherford International plc’s paper showed similar results as Halcon Resources Corp.’s notes declined.

Pharma name Teva Pharmaceutical Industries Ltd.’s issues also saw a mixed day.

Digicel drops

Telecom name Digicel’s notes saw a drop on Friday, traders said.

The 8¾% notes due 2024 shed 2 points to close at 94½ bid. The 6% senior unsecured notes due 2021 fell 5¼ points to close at 74¾ bid.

The Kingston, Jamaica-based mobile phone network provider’s structure was under pressure on Friday after news broke that it had reported an earnings drop and an increase in its debt load.

This past quarter’s earnings fell 9% to $210 million along with disappointing revenues at $570 million.

Concurrently, the company said that its debt had risen to $6.7 billion.

“There’s always talk of a restructure for them, but when that’s coming is not clear,” a trader said.

The news comes as the company tangles with the government of Antigua and Barbuda over use of spectrum in the Caribbean nation.

After receiving a court order that bars the government from confiscating its spectrum, prime minister Gaston Browne claimed that his government made an offer to Digicel management to buy out its spectrum.

The company has denied receiving any offers.

Norwalk, Conn.-based wireline sector peer Frontier’s debt issues were mixed in trading.

The 10½% senior notes due 2022 rose ¾ point to close at 67¾ bid. The 11% notes due 2025, while pushing up to 62½ bid, ended level at 61½ bid.

PetSmart better

In retail, PetSmart’s paper was better by the end of the session, market sources said.

The 8 7/8% senior paper due 2025 shot up 2¾ points to close at 97 bid. The 5 7/8% notes due 2025 added 1 point to close at 96½ bid.

On Friday, S&P Global Ratings raised its ratings on the Phoenix-based pet supplies retailer’s first-lien debt and its senior unsecured debt.

The agency cited the company’s 15% term loan repayment using proceeds from the initial public offering of its e-commerce segment Chewy.com.

The company expects store performance to improve as Chewy.com continues to grow revenue.

Rite Aid gains

Elsewhere in the space, Rite Aid’s notes were gaining, traders said.

The 7.7% senior debentures due 2027 gained 2¼ points to close at 61½ bid.

On Thursday, the debentures gained 1¾ points.

The Camp Hill, Pa.-based drug store chain has been seeing positive attention over the last few trading days despite reporting a disappointing first-quarter highlighted by a 14 cents per share loss.

The positivity stemmed from an announcement early Thursday that it had partnered with Amazon.com to install pickup counters for the e-commerce name in 100 stores.

There is a planned expansion of pickup counters at 1,500 stores by the end of the year.

Ensco Rowan level

While remaining active on Friday, Ensco Rowan’s issues were flat, market sources said.

The 5.2% senior notes due 2025, while reaching 75 bid during the session, closed level at 73¾ bid. The 7¾% notes due 2026 remained fixed at 77 bid.

The rigidity in the London-based contract driller’s structure comes as S&P affirmed all of its ratings.

The agency also affirmed a negative outlook, expecting credit measures to be weak over the next year.

A recent surge in oil prices and a better sector climate has resulted in corresponding positivity for the company’s notes.

Oil mixed

As oil futures ended mixed, distressed energy tranches moved similarly, traders said.

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

The 6% senior notes due 2024 gained 1 point to close at 62 bid. The 8% notes due 2022 lost 1¾ points to close at 74¼ bid.

Baar, Switzerland-based oilfield services provider Weatherford’s notes were also mixed.

The 8¼% senior notes due 2023 fell 2¾ points to close at 50¼ bid. The 9 7/8% notes due 2024 held level at 52¾ bid.

Houston-based producer Halcon Resources’ issues were in decline.

The 6¾% senior notes due 2025 dropped 1 point to close at 34 bid.

West Texas Intermediate crude oil futures for August delivery moved 96 cents lower to close the session at $58.47 per barrel.

North Sea Brent crude oil futures for August delivery remained unchanged at $66.55 per barrel.

Teva mixed

In the pharma space, Teva’s paper was mixed, market sources said.

The 3.15% senior notes due 2026 picked up 1½ points to close at 78½ bid. The 4.1% paper due 2046 shaved off ¼ point to close at 66¾ bid.

The Petach Tikva, Israel-based generic drug manufacturer’s paper has been trending negative over recent weeks as the company reckons with legal challenges over its alleged involvement in the opioid epidemic.

On Monday, the company’s $85 million settlement with Oklahoma was approved, which had sparked a debate on how much money it would have to pay out in future litigation.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.