J.C. Penney better after earnings report; PG&E drops on negative report

By James McCandless

San Antonio, Aug. 15 – Thursday saw a partial stabilization in the distressed space, with names moving independently based on individual headlines.

J.C. Penney Co., Inc.’s notes closed the day better after releasing a mixed earnings report on Thursday morning.

Sector peer Revlon, Inc.’s issues were gaining after the company announced that it would be holding a strategic alternatives review.

In utilities, PG&E Corp.’s paper dropped after a court monitor reported that the company had been careless in its wildfire prevention.

Drug maker Mallinckrodt plc’s notes were positive following its report of positive results from a clinical trial.

Elsewhere in the space, Teva Pharmaceutical Industries Ltd.’s issues were losing.

Telecom name CommScope Holding Co., Inc.’s paper declined amid a ratings downgrade.

Energy names California Resources Corp.’s, Chesapeake Energy Corp.’s and Chaparral Energy, Inc.’s notes fell with oil futures.

J.C. Penney up

Retailer J.C. Penney’s notes were better by Thursday’s close, traders said.

The 5 7/8% senior secured notes due 2023 added 2¼ points to close at 83 bid. The 8 5/8% notes due 2025 gained 3 points to close at 48½ bid.

On Thursday morning, the Plano, Texas-based department store chain reported a better-than-expected third-quarter earnings report.

The company reported a loss of 18 cents per share, narrower than the 32 cents per share loss that analysts had expected.

Revenues were reported under expectations at $2.62 billion.

Same-store sales fell 9 percent compared to this time last year.

The company saw positive attention after concurrently announcing that it would enter a partnership with clothing name thredUP to offer secondhand women's clothing and handbags in 30 stores.

“It shows that they’re not just laying down and dying, which you could say about some retailers,” a trader said. “They’re making an effort to adapt. It’s another question on whether it will work.”

The company’s structure has been pushed further into distressed territory amid general weakness in the retail sector.

Revlon gains

Retail sector peer Revlon’s issues were gaining, market sources said.

The 5¾% senior notes due 2021 moved up ¼ point to close at 90 bid. The 6¼% notes due 2024 rose 1½ points to close at 57½ bid.

News broke on Thursday that the New York City-based cosmetics producer has hired Goldman Sachs as financial adviser tasked with helping the name explore strategic alternatives.

Last week, the company reported a loss of 99 cents per share and revenues of $570.2 million for the second quarter, both below analyst predictions.

PG&E drops

Meanwhile, in utilities, PG&E’s paper dropped, traders said.

The 6.05% paper due 2034 declined 1¼ points to close at 110¾ bid.

The paper saw $28 million on the tape by the end of trading.

After the close on Wednesday, a court-appointed monitor in district court filed a report that stated that the San Francisco-based bankrupt electric utility is not doing enough to mitigate the risk of future wildfires.

The monitor criticized the company’s slowness to reach the year’s “vegetation management goals” and the work completed so far.

“It throws a wrench into their bankruptcy process,” a trader said. “I can see one of the creditor groups using this to bolster their argument that they shouldn’t be in control of the bankruptcy process.”

After receiving a number of equity capital commitments for a reorganization plan from several entities, the company said on Wednesday that it expects to file its own restructuring plan by Sept. 9.

Mallinckrodt up, Teva loses

Drug maker Mallinckrodt’s notes were on a positive path, market sources said.

The 5½% senior notes due 2025 garnered 1¾ points to close at 50½ bid. The 4¾% notes due 2023 picked up 2¼ points to close at 50¾ bid.

The Staines-upon-Thames, England-based drug manufacturer saw positive attention for most of Thursday after announcing positive results from a phase 3 clinical trial of new drug terlipressin in patients with hepatorenal syndrome type 1.

Later in the day, however, some gains tapered off due to general negativity as its sector faces weakness and outsized legal risk.

Petach Tikva, Israel-based generic producer Teva’s issues were losing in the session.

The 2.8% senior notes due 2023 shaved off ¼ point to close at 80¾ bid. The 3.15% notes due 2026 shed 1 point to close at 71½ bid.

CommScope declines

Telecom name CommScope’s paper was in decline, traders said.

The 5% senior paper due 2027 lost ¼ point to close at 81¼ bid.

On Thursday, S&P Global Ratings issued downgrades for the Hickory, N.C.-based telecom company and its CommScope Inc. subsidiary.

The agency lowered both entities to B from B+ and lowered the ratings on the debt.

Last week, the company outpaced analyst expectations after reporting a second-quarter profit of 66 cents per share.

Oil falls

Oil names were falling in line with trends in oil futures, market sources said.

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

The 6% senior notes due 2024 traded down 1¼ points to close at 40½ bid. The 8% notes due 2022 slid 2 points to close at 52 bid.

Oklahoma City, Okla.-based producer Chesapeake Energy’s issues also dipped on Thursday.

The 5½% senior notes due 2026 lopped off 1¾ points to close at 61 bid. The 8% notes due 2025 fell 1½ points to close at 74¼ bid.

Houston-based peer Chaparral Energy’s paper moved similarly.

The 8¾% senior paper due 2023 dived 4 points to close at 49 bid.

West Texas Intermediate crude oil futures for September delivery lost 76 cents to finish the session at $54.47 per barrel.

North Sea Brent crude oil futures for October delivery settled at $58.23 per barrel after a $1.25 decline.

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