For second session, California Resources leads activity for faltering E&P space; Valeant down across board

By Colin Hanner

Chicago, June 15 – Energy continued to be the name of the day on Thursday in the distressed debt market, sources said, as energy continued drop further after Wednesday data did not bode well for the sector as a whole.

“Today was a very lackluster day,” a market source said of the entire market. “Energy was still very active from yesterday.”

California Resources Corp. headlined activity in the exploration and production space, as did EP Energy Corp. and MEG Energy Corp.

On Wednesday, the Energy Information Agency reported an increase of 2.1 million barrels of gasoline inventories – “above the upper limit of the average range,” the agency said – which, in turn, drove the broader market downward.

Valeant Pharmaceuticals International Inc. saw an uptick in activity, though the same could not be said of its bond movement, which was starkly downward on the session in line with its stock price.

No company news drove the movement, a week after the Laval, Que.-based pharmaceutical company sold its iNova Pharmaceuticals business.

Intelsat SA saw virtually no movement on volume that was nearly half of Wednesday’s, and several other distressed notables – iHeartCommunications, Inc., Fresh Market Inc. and Hertz Corp. among them – made moves on nominal trading.

E&P follows Wednesday’s descent

It was much of the same for distressed energy names on Thursday, with oil continuing to falter on news from Wednesday.

West Texas Intermediate crude oil was down less than 1% to less than $44.50 a barrel.

Not only did Wednesday offer a weekly snapshot of crude oil and gasoline inventories, which were down and up, respectively, based on data from the EIA, but forewarnings from the International Energy Agency painted a stark picture of the months and years ahead for a commodity that continues to fluctuate immensely week-by-week.

The market seemed to surround around the shaky sector.

“Everything that was moving today was energy,” a trader said.

On the day, California Resources’ 8% notes due 2022 were down 1¼ points to 64¾, a trader said.

EP Energy’s 9 3/8% notes due 2020 were down 1¾ points to 83¼.

Denbury Resources Inc.’s 6 3/8% notes due 2021 were down 2¾ points to 69.

MEG Energy Corp.’s 7% notes due 2024 were down 1 point to 81.

Elsewhere in the energy space, electricity producer Talen Energy Corp.’s 6½% notes due 2025 were down 1 point to 72½.

Valeant sees pickup as bonds plunge

Valeant Pharmaceuticals was down across the board on the session, though no apparent news drove the movement.

The company’s losing day was led by its 6 1/8% notes due 2025, which were down 1 point to 82, a market source said.

The 5 7/8% notes due 2023 were down 1 point to 83, and its 5 3/8% notes due 2020 were down ¼ point to 94¾.

Elsewhere in the same space, Endo Pharmaceuticals plc’s 6% notes due 2023 were down ¼ point to 85.

Concordia International Corp.’s 9% notes due 2022 were up 2 points to 78 on just a few trades.

And in health care, Franklin, Tenn.-based hospital group Community Health Systems Inc. saw a ¾-point plunge to 87¼ in its 6 7/8% notes due 2022.

Intelsat quiets as bonds stay still

A day after bonds were moving substantially higher on no apparent drivers, bonds did not stray too far from where they began and volume was a lot lower.

Intelsat Jackson Holdings SA’s 7¼% notes due 2020 were unchanged at 94½.

Similarly-held 7½% notes due 2021 were up 1/8 point to 92 3/8.

Intelsat Luxembourg Holdings SA’s 8 1/8% notes due 2023 were unchanged at 57.

And the 7¾% notes due 2021 were also unchanged at 59.

Distressed roundup

Media company iHeartCommunications’ 9% notes due 2022 were down ½ point to 75, while its 9% notes due 2019 were down ¾ point to 79½.

Grocery store chain Fresh Market saw a 1½-point slide to 87½ in its 9¾% notes due 2023.

Hertz Corp.’s 6¼% notes due 2022 were unchanged at 84, a trader said, in line with most other Hertz bonds on the day.

And retailer Neiman Marcus Group, Inc.’s 8% notes due 2021 were down 2½ points to 52½ on only a few trades.

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