Bleeding goes on for Neiman Marcus as it sees steep declines; Avaya up; healthcare, pharma mixed

By Colin Hanner

Chicago, Jan. 23 – With no major political events shaping trading in the distressed market on Monday – in contrast to Friday’s presidential inauguration and relatively slow day activity-wise – distressed bonds continued to trade in line with momentum off news in recent sessions.

Among those, Avaya Inc. continued its active streak on the session after filing for Chapter 11 bankruptcy last week and saw modest bumps in two sets of its notes.

The weekend was not enough to stop the hemorrhaging for retailer Neiman Marcus Group, Inc., which dug further into losses on the session, dropping by several points in some notes, traders said.

Fellow retailer Nine West Holdings, Inc. bucked the declines of Neiman Marcus and posted a slight increase on the day.

In healthcare and pharmaceuticals, Community Health Systems, Inc. and BioScrip, Inc. – the former a hospital operator, the latter a home care and pharmaceutical company – both trended down as the future of the Affordable Care Act continued to have an effect on the providers of health services.

Canadian pharmaceutical company Valeant Pharmaceuticals International, Inc. saw mixed movement in several of its notes.

Several energy companies and offshore drillers – Noble Corp. and Pacific Drilling among them – saw varied movement.

Two distressed companies that are consistently active – iHeartCommunications, Inc. and Intelsat SA – both teetered in opposite directions on the session, albeit slightly.

Avaya climbs, slightly

From the latter part of last week, Avaya’s distressed notes changed course on Monday, trending upward after losses following the announcement of a Chapter 11 bankruptcy and fourth quarter results.

Also on Monday, rating’s agency Moody’s Investors Service downgraded Avaya’s corporate family rating to Caa3 from Caa2 and probability of default rating to D-PD from Caa3-PD, but revised the company’s outlook to stable from negative, meaning there is a low likelihood of a rating change in the medium term.

A trader said Avaya’s 7% notes due 2019 were up ¼ point to 83½. Another trader said the notes were up “about ½ point” to the same levels.

Neiman ‘sharply lower’

The trend in the past few sessions has been deeper and deeper declines for Neiman Marcus Group, which fell “sharply lower” on Monday, a trader said.

“It’s been drifting, and there was not fresh news, but these guys are really getting hit,” the trader said.

The 8% notes due 2021 were “very active” and down 4¾ points to 59½, a market source said, while a trade said they were down “about 4 points, trading in a 59-60 range.”

That handle is 10 points lower than last Tuesday’s level.

Meanwhile, the 8¼% notes due 2021, which have also kept in stride with the consistent losses, were down 2¼ points to 55¾.

The view of the retail sector is to blame, a trader said, as traditional retailers battle with the omnipresence of online retailers flooding the brick-and-mortar landscape.

Fellow storefront retailer Nine West Holdings, which also owns a variety of brands under its umbrella, saw a slight increase in its 8¼% notes due 2019, which were up ½ point to 26½, a trader said.

Healthcare down, pharma mixed

A sense of clouded uncertainty fell over the healthcare community late Friday as President Donald Trump signed the first of his executive orders titled, “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.”

Though the order does not have the authority to properly repeal the Affordable Care Act, it signals a goal toward the removal of the law, which set a flurry of healthcare companies declining in the aftermath as certainty about who pays for what seems assuredly up to a Republican-controlled Congress and a willing president.

For the session, Community Health’s 6 7/8% notes due 2022 were down 5/8 point to 70, a trader said. The company’s stock was down 14 cents, or 2.06%, to $6.43.

BioScrip’s 8 7/8% notes due 2021 were down 3/8 point to 78 3/8, a trader said.

“I don’t see them trade often, so I guess that’s significant,” the trader said.

In pharmaceuticals, Valeant Pharmaceuticals’ 6 1/8% notes due 2025 were unchanged at 75 5/8 on “some volume,” a market source said.

E&P mixed, mostly up

As oil futures ticked lower, with West Texas Intermediate falling nearly 1% to $52.77 a barrel, so did a distressed name that typically follows such movement.

California Resources Corp.’s 8% notes due 2022 were down ½ point to 87½, a trader said. A market source said the same notes were down ¾ point to the same level.

In news for the exploration and production sector, the Trump administration announced on Friday a mission statement for its “First Energy Plan,” a breakdown of energy policies envisioned for the next presidential term.

“The Trump Administration will embrace the shale oil and gas revolution to bring jobs and prosperity to millions of Americans,” wrote the Trump administration on the White House website. “We must take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own.”

Though they did not reflect the news in its gains, Noble Corp.’s 5¼% notes due 2042 were up ½ point to 71½ on a “handful of trades,” a trader said, adding that the 6.2% notes due 2040 were unchanged at 76½.

Over the weekend, Noble extended the longevity of two contracts with Saudi Aramco, a manufacturer and shipper of crude oil and natural gas.

Pacific Drilling, which saw a 1½-point increase in its 7¼% notes due 2017, finished at 53¼ on the session, a trader said.

Mixed distressed movers

Electricity provider FirstEnergy Corp.’s 6.8% notes due 2029 were up 1 to 2040, while the 6.05% notes due 2021 were up 5/8 point to 42 5/8, a trader said.

Intelsat Connect Finance SA’s 12½% notes due 2022 were down ¼ point to 60, a trader said.

iHeartCommunications, Inc.’s 9% notes due 2019 were up ¼ point to 85.

And global shipper Navios Maritime Holdings, Inc.’s 7 3/8% notes due 2022 were up “almost 1 point” to 62 1/8. Though there were no specific drivers of the movement, Navios’ also saw a 19-cent increase, or 9.5%, to $2.19.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.