Digicel up despite ratings downgrade; Bed Bath & Beyond slides in wake of earnings

By James McCandless

San Antonio, July 12 – The distressed space finished the week with the market focusing on telecom and retail names.

Digicel Group Ltd.’s notes headed higher on Friday despite receiving a ratings downgrade.

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

In the retail space, Bed Bath & Beyond Inc.’s paper continued to fall a day after releasing a lukewarm earnings report.

Another retailer, PetSmart, Inc., saw its notes finish mixed.

Meanwhile, PG&E Corp.’s issues also closed mixed as California creates a $21 billion fund to help settle wildfire claims.

Oil and gas name McDermott International, Inc.’s paper leveled off after a few days of rising in reaction to new contracts.

Despite modest gains for oil futures, Hi-Crush Partners LP and Superior Energy Services, Inc.’s notes dropped while Ensco Rowan plc’s issues were mixed.

Digicel up, Frontier mixed

Digicel’s notes were heading higher on Friday, traders said.

The 6¾% senior notes due 2023 rose ¾ point to close at 55¾ bid.

On Friday, Moody’s Investors Service issued downgrades to the Kingston, Jamaica-based mobile phone network provider.

The agency lowered the company’s corporate family rating, probability of default rating and several subsidiary ratings.

Moody’s said that the new ratings reflect its view that there is an increased risk of the company making another distressed exchange or debt restructuring within the next 12 to 18 months.

Recently, after releasing its latest earnings report, the company’s structure headed further downward after it revealed that its debt load had increased.

“I would expect them to try to do an exchange at the beginning of next year,” a trader said.

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

The 10½% senior notes due 2022 added ¼ point to close at 65½ bid. The 11% notes due 2025 shaved off ¼ point to close at 60¾ bid.

BB&B falls, PetSmart mixed

In the retail space, Bed Bath & Beyond’s paper continued to fall, market sources said.

The 5.165% senior paper due 2044 lost 1¼ points to close at 67¼ bid. The 4.915% paper due 2034 slid ¾ point to close at 73¼ bid.

On Thursday, the 5.165% paper dropped 4½ points and the 4.195% paper shed 2 points.

This week, the company released the results of its first-quarter earnings.

Earnings were pegged at a profit of 12 cents per share, outpacing analyst expectations of an 8 cents per share profit.

It also experienced goodwill and asset impairment charges of $448 million.

Phoenix-based pet supplies chain PetSmart’s notes finished mixed.

The 8 7/8% senior notes due 2025 rose ¼ point to close at 96¾ bid. The 5 7/8% notes due 2025, while moving up to 97½ bid during the day, ended level at 97 bid.

PG&E mixed

Meanwhile, in utilities, PG&E’s issues also saw a mixed session, traders said.

The 3¾% senior notes due 2042 shaved off ¼ point to close at 92½ bid. The 6.05% notes due 2034 held level at 112¼ bid.

This week, the San Francisco-based bankrupt electric utility saw increased attention as the California legislature passed a bill that would create a $21 billion fund to help the state’s utilities pay wildfire claims.

After the close on Friday, Governor Gavin Newsom signed the bill into law.

If the state had not taken “concrete actions” as recommended by S&P Global Ratings, the agency may have downgraded the state’s other utilities.

To access the fund, the company will need to submit or have approved a reorganization plan by June 2020 and compensate victims of 2017 and 2018 wildfires caused by equipment failures.

McDermott off

Oil and gas name McDermott’s paper declined at the end of the week, market sources said.

The 10 5/8% senior notes due 2024 lost ½ point to close at 96½ bid.

The Houston-based oil and gas engineering name’s structure has improved at the tail end of the week after announcing that it had won two contracts worth about $4 billion from Saudi Aramco.

The first contract is for the construction of a gas-oil separation plant while the second contract is for offshore gas facilities and pipelines.

Oil tranches mixed

As oil futures modestly increased, distressed oil tranches varied, traders said.

Houston-based energy logistics name Hi-Crush’s notes fell.

The 9½% senior notes due 2026 dropped 1 point to close at 64¼ bid.

Houston-based oilfield services provider Superior Energy’s issues also finished negative.

The 7 1/8% senior notes due 2021 shed 2 points to close at 66 bid. The 7¾% notes due 2024 also declined by 2 points to close at 59 bid.

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

The 5.2% senior paper due 2025 slipped ¼ point to close at 75¼ bid. The 7¾% paper due 2026 added 2½ points to close at 80½ bid.

West Texas Intermediate crude oil futures for August delivery ended 1 cent better to end the week at $60.21 per barrel.

North Sea Brent crude oil futures for September delivery settled at $66.72 per barrel at Friday’s close after a 20 cent rise.

© 2015 Prospect News.
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