Hi-Crush notes decline after earnings miss; J.C. Penney issues mixed as company exits appliance business

By James McCandless

San Antonio, Feb. 6 – The distressed market ramped up activity Wednesday compared to Tuesday’s dearth of trading.

Hi-Crush Partners LP’s notes declined after the company reported lower-than-expected Q4 earnings.

Oil futures rose, sparking positive movement for California Resources Corp., Ensco plc and YPF SA’s issues.

Elsewhere, J.C. Penney Co., Inc.’s paper was mixed after the company announced that it would stop selling appliances.

Sector peer Revlon, Inc.’s notes were higher as Neiman Marcus Group, Inc.’s issues declined.

Meanwhile, CommScope Technologies LLC’s paper trended upward as its parent company preps a $3 billion three-tranche offering.

Telecom name Intelsat SA’s notes were mixed.

Hi-Crush down

In the energy space, Hi-Crush’s notes were lower, traders said.

The 9½% notes due 2026 dropped 2 points to close at 77½ bid.

Late Tuesday, the Houston-based energy logistics name released its fourth-quarter earnings report.

The company reported a loss of 8 cents per share, missing analyst expectations of a 6 cent per share loss.

In a conference call Wednesday, chief financial officer Laura Fulton said that the company’s balance sheet is positioned for future growth, Prospect News reported.

“We have maintained a strong balance sheet that will provide us with the flexibility needed to pursue our priorities going forward, even in downtimes,” Fulton said.

The company’s notes have floated in distressed territory amid persistent weakness in the frac sand industry, one of its key segments.

Oil names up

Meanwhile, better oil futures sparked positivity for distressed oil tranches, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ issues were on a positive track.

The 6% notes due 2024 rose 1½ points to close at 69½ bid. The 8% notes due 2022 gained ¾ point to close at 82 bid.

London-based contract driller Ensco’s paper was also better.

The 7¾% paper due 2026 added 1 point to close at 82½ bid. The 7.2% paper due 2027 also jumped up 1 point to close at 79¼ bid.

Buenos Aires-based producer YPF’s notes joined the trend.

The 7% notes due 2047 rose ¼ point to close at 82¾ bid.

West Texas Intermediate crude oil futures for March delivery added 35 cents, closing the session at $54.01 per barrel.

North Sea Brent crude futures for March delivery ended at $62.69 per barrel after rising 71 cents.

J.C. Penney mixed

Elsewhere, J.C. Penney’s issues saw mixed activity, traders said.

The 7.4% notes due 2037 gained 2 points to close at 38½ bid. The 6 3/8% notes due 2036 fell ¾ point to close at 35¼ bid.

The Plano, Texas-based department store chain announced mid-Wednesday that it would stop selling appliances in all of its stores by the end of February.

The company said that the decision was made after an evaluation of financial performance among its divisions.

“This is good for them,” a trader said. “It represents executives, especially the new CEO, who are serious about improving profits.”

The chain had been selling major appliances for three years.

Jill Soltau was named chief executive officer in October.

In other retail activity, New York City-based cosmetics producer Revlon’s paper was higher.

The 5¾% paper due 2021 added ¼ point to close at 80¾ bid. The 6¾% paper due 2024 gained 2 points to close at 57½ bid.

Dallas-based luxury retailer Neiman Marcus’ notes declined.

The 8% notes due 2021 shaved off ¼ point to close at 45 bid.

CommScope rises

CommScope Technologies’ issues were headed upward, market sources said.

The 5% notes due 2027 rose ½ point to close at 85½ bid.

The Ashburn, Va.-based wireless engineering solutions name’s issues were positive as its parent company, CommScope Inc., prepares a Thursday pricing of $3 billion three-tranche high-yield notes, Prospect News reported.

Intelsat mixed

Intelsat’s paper was experiencing mixed trading, traders said.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 ended flat at 91¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 picked up 1¾ points to close at 86 bid.

The Luxembourg-based satellite operator continues to retain its popularity in the distressed telecom sector.

“We expected people to ease off and start to pull their money from it in the new year,” a trader said. “We saw a little bit of that, but c-band satellite stuff is still popular so there’s still a market for hedge funds to jump into.”

© 2015 Prospect News.
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