Bed Bath & Beyond notes gain amid executive shakeup; PG&E lower after settlement news

By James McCandless

San Antonio, Dec. 17 – Newsmakers in the retail and utilities sectors drove much of the trading activity in distressed debt on Tuesday.

Bed Bath & Beyond Inc.’s notes gained by the close after the company announced the departure of several executives.

Sector peer L Brands, Inc.’s issues also improved despite receiving a ratings downgrade.

Meanwhile, utilities name PG&E Corp.’s paper moved lower as the name works to reconfigure its restructuring plan.

In health care, Envision Healthcare Corp.’s notes tapered off recent gains generated from delays in surprise billing reform while medical transporter Air Methods Corp.’s issues saw gains.

A positive run in oil futures was extended, lifting Transocean Ltd.’s, McDermott International, Inc.’s and Valaris plc’s paper.

Elsewhere, satellite operator Intelsat SA’s notes were active, rising at the top of the telecom space.

Bed Bath gains

Bed Bath & Beyond’s long-term notes were seen gaining on Tuesday, traders said.

The 5.165% senior notes due 2044 inched up ¼ point to close at 73¼ bid. The 4.915% senior notes due 2034 gained ¼ point to close at 75¼ bid.

Early Tuesday, the Union, N.J.-based retailer announced the departure of six high-level executives, including the chief marketing officer and chief merchandising officer.

The company said that the departures were to aid the new vision of recently appointed chief executive officer Mark Tritton.

The announcement goes on to say that the company will announce a “new vision” early in 2020.

Throughout the year, the name fell under pressure from activist investors to turn around its lagging performance, leading to the ousting of previous CEO Steven Temares.

L Brands improves

Sector peer L Brands’ issues also improved during the session, market sources said.

The 5¼% senior notes due 2028 rose 3½ points to close at 97½ bid. The 6 7/8% senior notes due 2035 picked up 1¾ points to close at 88 bid.

The Columbus, Ohio-based retail name received a ratings downgrade from Moody’s Investors Service.

The agency lowered the company’s corporate family rating, probability of default rating, speculative grade liquidity rating and issue-level ratings.

Moody’s said that the move was reflective of persistent earnings weakness, particularly from its Victoria’s Secret brand.

The name is under pressure from stakeholders to either increase performance in weak segments like Victoria’s Secret or spin them off.

“We’re in the thick of the holiday shopping season, so a lot of names are poised for the chopping block depending on who gets what share of the spending,” a trader said.

PG&E lower

Meanwhile, utilities name PG&E’s paper moved lower, traders said.

The 6.05% senior notes due 2034 shaved off ¾ point to close at 106 bid.

Late Monday, the San Francisco-based bankrupt electric utility announced that it had reached a modified $13.5 billion settlement with wildfire victims, removing a clause that required the approval of California governor Gavin Newsom.

The company and Newsom have been at odds throughout the bankruptcy process, most recently on Friday after Newsom said that PG&E’s restructuring plan falls short of state regulations.

The governor has repeatedly pushed the company to allow for more state oversight, proposing an increased board presence, a better financing package and increased state regulator control if safety standards go unmet.

While settlements were reached with wildfire victims and insurance providers, the utility is reworking its restructuring plan to meet the governor’s approval.

Envision off

In the health care space, Envision’s notes tapered off from Monday’s gains, market sources said.

The 8¾% senior notes due 2026 lost 2 points to close at 63 bid.

On Monday, the notes spiked 7¾ points.

The jump came for the Nashville-based hospital operator after news broke that an impasse between the U.S. Senate and Congress meant that legislation intended to curb surprise medical billing would not be passed before the end of the year.

The bill, previously expected to be included in a year-end financing package, is now slated for mid-2020, according to analysts.

Englewood, Colo.-based health transporter Air Methods, often cited in surprise billing talk, saw its issues gain.

The 8% senior notes due 2025 added 4 points to close at 66¾ bid.

Oil positive

Distressed energy tranches were positive as futures extended a run of increases, traders said.

Crude futures were favored amid better trade sentiments and a pledge by OPEC to cut supplies by 50,000 barrels a day starting Jan. 1.

West Texas Intermediate crude oil futures for January delivery picked up 73 cents to settle at $60.94 per barrel.

North Sea Brent crude oil futures for February delivery finished at $66.10 per barrel after a 76 cent jump.

Steinhausen, Switzerland-based offshore contract driller Transocean’s paper was lifted.

The 7½% senior paper due 2031 picked up 2½ points to close at 78½ bid.

Houston-based oil and gas engineering company McDermott’s notes followed the trend.

The 10 5/8% senior notes due 2024 garnered ¼ point to close at 10¾ bid.

London-based driller Valaris’ issues moved higher.

The 5.2% senior notes due 2025 shifted up 2 points to close at 54½ bid. The 7¾% senior notes due 2026 rose 2 points to close at 56½ bid.

Intelsat rises

Elsewhere, Intelsat’s paper rose in the telecom space, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 gained 2½ points to close at 51 bid. The 9½% senior paper due 2023 added 2½ points to close at 62½ bid.

The Luxembourg-based satellite operator’s structure is routinely trading at the top of the telecom space, recently falling further into distressed territory following a conflict with the Federal Communications Commission.

After lobbying the agency to hold a private auction for C-band spectrum between three satellite companies that comprise the C-Band Alliance, commissioners elected to pursue a public option.

“It continues to hold a topical space in distressed trading, which should hold through the new year,” a trader said.

© 2015 Prospect News.
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