L Brands bonds active after analyst comments; Teva Pharmaceutical notes edge higher

By James McCandless

San Antonio, Oct. 18 – The distressed space saw significant activity in the retail and pharma sectors, perpetuating a weeklong trend.

L Brands, Inc.’s notes diverged after an analyst slashed the target stock price, citing industry weakness ahead of the holiday season.

Sector peer Rite Aid Corp.’s issues were also mixed as it received a second ratings downgrade this week.

Meanwhile, in pharma, Teva Pharmaceutical Industries Ltd.’s paper moved higher in a week of shifting news concerning opioid settlements.

Drug maker Mallinckrodt plc’s notes varied throughout the session.

Oil futures slipped, leading to similar dips for Superior Energy Services, Inc.’s and McDermott International, Inc.’s issues while Valaris plc’s paper moved both higher and lower, depending on the tranche of notes.

Propane seller Ferrellgas Partners LP’s notes recovered somewhat from recent declines.

Utilities name PG&E Corp.’s issues were active but unchanged.

L Brands diverges

L Brands’ notes were seen diverging in Friday’s session, traders said.

The 6¾% senior notes due 2036 fell ½ point to close at 84 bid. The 5¼% senior notes due 2028 improved by 1 point to close at 93½ bid.

On Friday, the Columbus, Ohio-based retailer’s structure saw some pressure after a Credit Suisse analyst cut the price target of its common stock to $14.00 from $20.00, citing continued industry weakness in the run-up to the holiday shopping season.

The company has received increased scrutiny amid continual weakness quarter by quarter, most notably in its Victoria’s Secret brand.

Last week, the company issued a round of layoffs in its corporate headquarters.

Rite Aid mixed

Sector peer Rite Aid’s issues also saw mixed movements, market sources said.

The 6 1/8% senior notes due 2023 were active but unchanged at 84½ bid. The 7.7% senior debentures due 2027 rose by 2 points to close at 64¼ bid.

During the Friday session, Moody’s Investors Service issued a downgrade for the Camp Hill, Pa.-based drug store chain.

The agency lowered its probability of default rating, corporate family rating and issue-level ratings. It cited the company’s cash tender offers for two series of notes at a discount as a default.

Earlier in the week, S&P Global Ratings issued a downgrade for the same reasons.

“It’s not likely that it will actually default soon,” a trader said.

Teva higher

Meanwhile, in the pharma space, Teva’s paper pushed higher, traders said.

The 3.15% senior notes due 2026 gained ½ point to close at 74 bid. The 2.8% senior notes due 2023 improved by ¾ point to close at 85½ bid.

This week, the ground shifted numerous times for the Petach Tikva, Israel-based generic drug producer and others in the space as several companies in the space work toward coming to settlements for any opioid-related litigation.

News out this week reported that the company is working to come to a $50 billion blanket settlement that includes giving away billions of dollars in medications and operating a distribution network for those medications for 10 years.

On Monday, a trial is set to begin in federal court in which Teva is one of the defendants.

Staines-upon-Thames, England-based peer Mallinckrodt’s notes were mixed.

The 5¾% senior notes due 2022 fell ½ point to close at 38½ bid. The 5½% senior notes due 2025 garnered ½ point to close at 33 bid.

Oil trends downward

As oil futures saw a slight loss, distressed energy tranches trended negative, market sources.

West Texas Intermediate crude oil futures for November delivery fell 15 cents to settle the week at $53.78 per barrel.

North Sea Brent crude oil futures for December delivery finished at $59.42 per barrel after a 49 cent slide.

Houston-based oilfield services provider Superior Energy’s issues followed the trend.

The 7 1/8% senior notes due 2021 dipped ¼ point to close at 73¾ bid. The 7¾% senior notes due 2024 lost ½ point to close at 55 bid.

Houston-based oil and gas engineering company McDermott’s paper also moved to lower levels.

The 10 5/8% senior paper due 2024 declined by ¼ point to close at 28½ bid.

London-based contract driller Valaris’ notes differed in direction.

The 5.2% senior notes due 2025 added ½ point to close at 56 bid. The 7¾% senior notes due 2026 dropped ¼ point to close at 57 bid.

Ferrellgas up

Elsewhere, Ferrellgas’ issues were moving upward, traders said.

The 6¾% senior notes due 2022 jumped 2¼ points to close at 84 bid.

The Overland Park, Kan.-based propane name’s issues came off of recent lows after the company expressed worries about its status as a “going concern” this week as it reported quarterly earnings.

The company failed to meet analyst expectations for the third quarter with a loss of 72 cents per share and revenues of $279.1 million.

It also is embroiled in a fracas with a large bondholder, who claims that the company is in default.

PG&E active, level

Utilities name PG&E’s paper was active but finished unchanged, market sources said.

The 6.05% paper due 2034 held level at 112 bid.

The San Francisco-based electric utility is facing a challenge to its attempt to enter into a restructuring support agreement with its consenting subrogation claimholders, Prospect News reported.

Earlier in the week, the company said that it had entered into debt commitment letters under which the commitment parties agreed to provide $34.46 billion in bridge financing.

© 2015 Prospect News.
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