After downgrade, Neiman continues to trade lower; California Resources, Murray Energy rise; Cengage pares

By Colin Hanner

Chicago, Feb. 9 – Though equity markets were experiencing a field day on promises of a business tax cut plan by President Trump, the distressed market had a “muted session” on Thursday, a trader said, where low volume and smaller staffs characterized a day where much of the East Coast was prepping for inclement weather.

“Not a tremendous amount of stuff going on,” a trader said. “Focus [was] on new issues.”

Yet, that did little to stop the decline for Neiman Marcus Group, Inc., which faltered for the third-straight session by several points. Earlier in the session, Standard and Poor’s downgraded its rating on the retailer.

In energy and production, California Resources Corp.’s distressed issue followed in line with the biggest rise in oil prices this week, and in coal, Murray Energy Corp. continued to stay active and traded much higher than in previous sessions.

Iron ore producer Cliffs Natural Resources, Inc. was up on positive quarterly results, a market source said.

Outside of those issues, a trader said activity was low.

Valeant International Pharmaceuticals, Inc. was down marginally on the day, Community Health Systems, Inc. was up, though traded tight, and educational content, technology, and services company Cengage Learning Inc. pared gains from Wednesday’s surge.

Down goes Neiman

The decline for Neiman Marcus Group’s issued debt continued on the session, compounded by a downgraded by S&P.

A trader said the 8% notes due 2021 were down 1¼ points to 55½. Another trader said the same notes were down to 54½ during intraday trading but bounced back to a 55 to 56 zip code to finish the session.

The 8¾% notes due 2021, meanwhile, were down 1 point to 52, a market source said.

S&P agency lowered Neiman to CCC+ from B- on Thursday, citing trends such as weak mall traffic, a highly promotional retail apparel environment and cautious consumer spending that continued to weigh heavily on Neiman Marcus' operating performance and EBITDA, the agency said.

The apparel retail market will continue to be weak, S&P said, and Neiman Marcus' operating performance will remain under pressure.

E&P mixed

As oil prices ticked higher – 1.5% by day’s end – at least one distressed company followed suit.

Leading oil and natural gas producers was California Resources Corp., whose 8% notes due 2022 were up ¾ point to 87¼, a trader said.

A market source said they were up ¾ point to 87½.

Offshore driller Hornbeck Offshore Services, Inc.’s 5% notes due 2021 were unchanged at 68½, a trader said, though only a single trade occurred in the notes on the session.

And London-based Ensco plc’s 5¾% notes due 2044 were down ½ point to 78½, a trader said.

Power down

A series of power producers were down by several points on the session, a trader said.

One of them, GenOn Energy, Inc., was one of the distressed market’s biggest losers on the day, specifically the 9½% notes due 2018, which were down 1¼ points to 78¼, a trader said.

A market source said the notes were down by the same margin but went out with a 79 handle.

Allentown, Pa.-based Talen Energy Corp.’s 6½% notes due 2025 were down 1½ points to 81½, a market source said.

Out of the fire

St. Clairsville, Ohio-based Murray Energy Corp. continued its active streak for the week though jumped higher than it had at any point during Thursday’s session.

The coal company’s 11¼% notes due 2021 were up 1¼ points to 75, a trader said.

And for Cliffs Natural Resources, positive quarterly results, including a revenue boost of 58%, brought its 6¼% notes due 2040 up “almost 3 points” to 84½, a trader said.

Cliff’s stock price was up $1.85, or 19.43%, to $11.37.

In health and pharma

Hospital operator Community Health’s 6 7/8% notes due 2022 were up ½ point to 73¾, a trader said, though only on a half-dozen trades.

And pharmaceutical company Valeant Pharmaceuticals’ 5 7/8% notes due 2023 were down ¾ point to 78, a market source said.

Distressed mixers

Notable distressed names traded on Thursday, though volume was relatively small, a trader said.

Among those, Intelsat Jackson Holdings’ 7½% notes due 2021 were up 2 points to 78¼, though a trader emphasized the volume was light.

Two sets of iHeartCommunications, Inc. notes were unchanged on the day, including the 9% notes due 2022, which held its 74¾ handle.

The 9% notes due 2019 were also unchanged, though settled at 84½.

Though it still held onto much of the movement from the previous session, Cengage Learning’s 9½% notes due 2024 were “down a little bit” to go out around 88½, a 1½ to 2½ point loss from Wednesday’s finish.

And moving down a “smidge softer” were Avaya Inc.’s 7% due 2019, which were trading in the 81¼ to 81¾ zip code, a trader said, a day following the telecommunications company’s quarterly results.

© 2015 Prospect News.
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