California Resources leads most-active for second-straight session; GenOn, Talen higher; Neiman unchanged

By Colin Hanner

Chicago, May 8 – Noteworthy activity was confined to just a few names in the distressed debt market on Monday, traders said.

California Resources Corp. led the way a session after its quarterly earnings, and, on a broader scale, optimism surged around the Organization of Petroleum Exporting Countries’ willingness to extend supply cuts.

GenOn Energy, Inc. remained near the top of the most-active list, followed by Talen Energy Corp.

From there, trading was “dropping off precipitously,” a trader said, with notable distressed names trading on lower-than-usual volume for the day.

Community Health Systems, Inc., Valeant Pharmaceuticals International, Inc. and Concordia International Corp. all moved fractionally in the health care and pharmaceutical spheres.

Neiman Marcus Group, Inc. was unchanged after Reuters reported that Hudson Bay Co. had hired a debt restructuring adviser in its merger efforts with the company, yet another sign that a possible merger between the two may be losing steam.

California Resources tops E&P

The weekend did little to stop the momentum of California Resources, which led the E&P distressed debt space for a second-straight session.

Its 8% notes due 2022 were up 3/8 point to 74 5/8, a market source said.

On Friday, the company reported net income of $53 million, a year-over-year gain compared to the $50 million loss during the same period in 2016.

Affecting the entire sector, Saudi Arabia and Russia’s energy ministers supported an extension for the supply glut into the second half of the year, several news sources reported.

Other distressed E&P names were mixed.

Denbury Resources Inc. was down more than 1 point on a single print, a trader said, two sessions after posting worse-than-expected first quarter figures.

EP Energy Corp.’s 8% notes due 2025 were up ½ point to 87½.

And MEG Energy Corp.’s 7% notes due 2024 were up ¼ point to 86½.

Hornbeck Offshore Services, Inc., which provides services to the offshore service industry, was unchanged in its 5% notes due 2021, which finished at 58¼, a trader said.

Electric feeling higher

GenOn Energy continued to stay active after its offering announcement on Thursday, especially in its 7 7/8% notes due 2017, which were up ¼ point to 89¼ on the session, a trader said.

Talen Energy’s 9½% notes due 2022 were up 1¼ points to 88¾.

The company will hold a conference call on Wednesday at 4:30 p.m. ET to discuss first quarter results with its debt investors, a company news release said.

In health and pharma

It was a mixed bag of movement for a handful of health-related names on the day.

Community Health’s 6 7/8% notes due 2022 were up ½ point to 88¼.

Valeant’s 6 3/8% notes due 2020 were unchanged at 89 5/8, while its 6 1/8% notes due 2025 were up ¼ point to 76.

And Concordia’s 7% notes due 2023 were up 1¼ points to 18¾.

In the opposite direction, Endo International plc’s 6% notes due 2023 were down ½ point to 85¼.

Neiman flat on merger talks

Neiman Marcus’ $4.7 billion debt load is a point of contention in Hudson Bay Co.’s proposed merger of the two companies, and on Monday, Hudson Bay hired Evercore Partners Inc. to figure out solutions to combine the companies without its debt becoming its own, Reuters reported.

That did little to shift Neiman’s 8% notes due 202, which were unchanged at 57¾, a trader said.

Distressed roundup

Intelsat Jackson Holdings SA’s 5½% notes due 2023 were down 7/8 point to 84 5/8.

Gold, silver and copper producer Freeport McMoRan Inc.’s 5.45% notes due 2043 were down ¼ point to 84¼, a trader said.

Hertz Global Holdings, Inc.’s 5½% notes due 2024 were down ¼ point to 84, a trader said.

And iHeartCommunications, Inc.’s 9% notes due 2021 were down ½ point to 75½.

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