J.C. Penney notes decline as stores temporarily shuttered; CBL eyed after ratings cut

By James McCandless

San Antonio, March 18 – Blanket negativity covered the distressed debt market on Wednesday as the economy continues to weaken due to the coronavirus.

J.C. Penney Co., Inc.’s notes dipped after the company announced that it would temporarily close all of its stores and corporate offices.

Sector peer Party City Holdco Inc.’s issues took a slide after making a similar announcement about its retail locations.

Elsewhere, retail-focused REIT CBL & Associates Properties, Inc.’s paper varied in direction after receiving ratings downgrades.

Oil and gas name Gulfport Energy Corp.’s notes weakened after news broke that the company has hired restructuring advisers.

Fresh lows for energy futures sparked losses for Whiting Petroleum Corp.’s, Chesapeake Energy Corp.’s and California Resources Corp.’s issues.

Meanwhile, in the telecom space, Frontier Communications Corp.’s and Intelsat SA’s paper followed the overarching market trend.

J.C. Penney, Party City dip

J.C. Penney’s notes declined, traders said.

The 5 7/8% senior secured notes due 2023 fell 5½ points to close at 67 bid. The 5.65% senior notes due 2020 dropped by 2 points to close at 73 bid.

On Wednesday, the Plano, Tex.-based department store chain announced that it would temporarily close all of its stores and corporate offices effective March 18 through April 2, becoming one of the latest retail giants to do so.

The company had been working to execute a turnaround in a weakened retail sector, piloting new programs and making changes in leadership.

Another company to announce mass store closures was Elmsford, N.Y.-based party supplies retailer Party City, which saw its issues take a slide.

The 6 5/8% senior notes due 2026 lost 7¾ points to close at 21 bid.

The company said that it would close all of its U.S. retail locations through March 31.

“Retail was already weakened so this rash of closings may result in some restructures,” a trader said.

CBL active

Elsewhere, property name CBL’s paper varied in direction, market sources said.

The 5¼% senior notes due 2023 added 2¼ points to close at 34¼ bid. The 4.6% senior notes due 2024 cratered 12 points to close at 20¼ bid.

In light of non-essential stores announcing temporary closures across the country, the Chattanooga, Tenn.-based retail-focused real estate investment trust received downgrades from a pair of ratings agencies on Wednesday.

S&P Global Ratings lowered the company’s overall rating to CCC+ from B and also cut its unsecured debt rating.

The agency also withdrew CBL’s ratings at the company’s request.

S&P cited its view that the name’s capital structure is unsustainable and that refinancing options are difficult as retail grinds to a halt during the coronavirus pandemic.

For similar reasons, Moody’s Investors Service slashed the company’s senior unsecured debt ratings, corporate family rating and speculative-grade liquidity rating.

The outlook remains negative.

Gulfport weaker

Oil and gas name Gulfport Energy’s notes weakened, traders said.

The 6% senior notes due 2024 shaved off ¼ point to close at 22 bid.

News broke on Wednesday that the Oklahoma City-based independent oil and gas producer has hired restructuring advisers in an effort to reduce its debt load of about $2 billion.

The company has reportedly hired Perella Weinberg Partners LP and its energy advising segment Tudor, Pickering, Holt & Co. to study its options.

As of now, no restructuring measures are being taken.

Oil futures drop

Fresh lows for energy futures sparked losses in distressed energy, market sources said.

West Texas Intermediate crude oil futures for April delivery dived $6.58 to settle at $20.37 per barrel.

North Sea Brent crude oil futures for May delivery finished at $24.88 per barrel after a $3.85 drop.

Denver-based producer Whiting Petroleum’s issues saw a haircut.

The 6¼% senior notes due 2023 shed 3¾ points to close at 10½ bid. The 6 5/8% senior notes due 2026 moved down 4 points to close at 8 bid.

Chesapeake Energy, another Oklahoma City-based producer, saw its paper follow futures to lower ground.

The 11½% paper due 2025 slipped 3¾ points to close at 11¼ bid.

Los Angeles-based energy name California Resources’ notes were under water.

The 6% senior notes due 2024 lopped off 1 point to close at 6½ bid. The 8% senior secured notes due 2022 lost 2 points to close at 3 bid.

“For the rest of the week I think we’re going to see energy trending down even more,” a trader said. “That’s unless we hear some good news.”

Frontier, Intelsat down

Meanwhile, in the telecom space, Frontier’s issues followed the market trend downward, traders said.

The 10½% senior notes due 2022 gave back 3¾ points to close at 31 bid. The 11% senior notes due 2025 dived 8 points to close at 26 bid.

On top of the overall pressure on the market from the economic effects of the Covid-19 pandemic, the company has seen its issues take a negative trend after announcing on Monday that it would enter a 60-day forbearance period after deciding to skip about $322 million in interest payments.

The company is in restructuring talks with creditors with a Chapter 11 bankruptcy filing increasingly likely.

A day after the news, S&P and Fitch Ratings issued a slate of downgrades.

Luxembourg-based satellite operator Intelsat’s paper saw similar movements.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 shed ¼ point to close at 26 bid. The 9½% senior notes due 2023 lost 5 points to close at 39 bid.

© 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.