Hornbeck Offshore down big after Q4 results; Murray continues upsurge; Valeant, Avaya, Hertz down

By Colin Hanner

Chicago, Feb. 16 – Activity was overall muted in the distressed market on Thursday, traders said, with familiar issues continuing to steal most of the action, though an offshore transport service company faltered after releasing disappointing fourth quarter results.

Hornbeck Offshore Services, Inc. saw multi-point decreases in two of its notes a day after releasing quarterly figures.

“They missed earnings, and it clubbed them,” a trader said.

Following the movement of the past two sessions, St. Clairsville, Ohio-based private coal company Murray Energy Corp. continued to post gains on heavy volume, trader said.

Quite a few of Valeant Pharmaceuticals International, Inc.’s distressed issues traded down following the approval of its brodalumab drug, Siliq, by the Food and Drug Administration.

Valeant’s stock dropped on the day, as well.

There were a few moves in the energy arena on the session, including California Resources Corp., which traded down marginally ahead of its earnings release; iHeartCommunications, Inc. was sideways after trading higher in the past few sessions; Avaya Inc. was down several points; and several one-off issues were mixed on a low-volume session.

“There wasn’t a ton of volume today, certainly not distressed stuff,” a trader said. “It looked like the market took a breather.”

Hornbeck falls

It was earnings that brought down Hornbeck Offshore on Thursday, traders said, with multiple issues falling as a result.

The 5% notes due 2021 were very active, a trader said, trading down 5¼ points to 68¾. Another trader said the notes traded down 3 to 4 points to the same handle.

Following were the 5 7/8% notes due 2020, which were down 4 points to 72¼, a trader said.

Addressing the company’s long-term indebtedness, Todd Hornbeck, president and chief executive officer, offered a picture of where the offshore service company stands.

“The reality is that we do not have enough cash on hand, nor do we have the visibility toward generating enough from operations to repay these obligations as they come due,” Hornbeck said in a conference call.

“Under normal conditions, such indebtedness would likely be refinanced with similar notes under similar terms with more extended maturities. Under present market conditions, the terms and conditions of any such refinancing, assuming its availability, would likely be less favorable than normal.”

Hornbeck’s stock was down $1.70, or 26.30%, to $4.75.

Murray continues climbs

Seeing slightly less movement then during the previous two sessions, Murray Energy Corp. traded higher on heavy volume, trader said.

The 11¼% notes due 2021 were up 1 to 1½ points to an 83½ to 84 zip code, a trader said.

Another trader said the notes were up 1¼ points to 83¾.

Elsewhere in the coal sphere, Gillette, Wyo.-based Cloud Peak Energy Inc.’s 6 3/8% notes due 2024 were up 2¼ points to 77½, a trader said.

Losing Valeant

It was the approval of the Siliq – a drug collaborated by Valeant International Pharmaceuticals and AstraZeneca plc – by the FDA that subsequently led to the decline in a series of Valeant’s distressed issues on Thursday.

As part of the collaborative agreement, Valeant will pay $130 million to AstraZeneca at the first regulatory approval, according to a 6-K filing with the Securities and Exchange Commission. The two companies will share in the drug’s profits.

In the distressed sphere, Valeant’s 5 7/8% notes due 2023 were down 1/8 point to 79 7/8, a trader said.

Sharing in a ½-point decline were the 5 5/8% notes due 2021, which finished with an 82 1/8 handle, and the 6¾% notes due 2021, which finished at 88 3/8.

Bucking the losing trend were the 7½% notes due 2021, which were up ½ point to 91, a market source said.

Avaya ‘leaks’

Telecommunications company Avaya “continues to leak a little bit,” a trader said Thursday, referring to the 7% notes due 2019.

One trader said that he saw the notes dip below an 80 handle during the afternoon, while another trader said the notes were down 2 points to 79.

In energy

In the exploration and production sector, movement was generally down on the session.

In anticipation of its quarterly earnings, California Resources’ 8% notes due 2022 traded tight, down ¼ point to 87½, a trader said.

Plano, Tex.-based Denbury Resources Inc.’s 6 3/8% notes due 2021 were down 1¼ points to 2021, a market source said.

And Canadian oil sands producer MEG Energy Corp.’s 7% notes due 2024 were down ¾ point to 92¼.

In the electricity realm, GenOn Energy, Inc.’s 9½% notes due 2018 were unchanged at 78, a trader said, while First Energy Solutions Corp.’s 6.05% notes due 2021 were down 2½ points to 38.

Idiosyncratic wrap-up

iHeartCommunications traded only a few times on the day, a trader said, with another trader adding that the 14% notes due 2021 were sideways after being up “a lot this week.”

They notes remained unchanged at 40½.

After jumping in prior sessions, Intelsat Jackson Holdings SA took a backseat to the upticks on the session and was down ½ point in its 7¾% notes due 2021, which finished with a 39½ handle, a trader said.

After a slight slump on Wednesday, Neiman Marcus Group, Inc. rebounded with an “about a point” increase in its 8% notes due 2021, which finished at 58, a trader said.

More than a week after announcing surprisingly good quarterly results, Cengage Learning Inc. ticked higher in its 9½% notes due 2024, which finished with a 91½ handle. A trader said they had been as low as 88 as of recent.

And Hertz Global Holdings, Inc. was “active,” a trader said, referring to the 5½% notes due 2024, which traded down about 2 points to an 87 to 87½ zip code.

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