Sanchez, Hornbeck notes rise despite posting Q3 losses; Bed Bath & Beyond issues lead retail activity

By James McCandless

San Antonio, Nov. 1 – Energy remained the focus of distressed trading Thursday as more names put out third-quarter earnings.

Sanchez Energy Corp.’s notes rose Thursday despite reporting mixed results in its third-quarter earnings.

Hornbeck Offshore Services, Inc.’s issues also rose after reporting a profit loss but outpacing revenue estimates.

Elsewhere, sector peer Weatherford International plc’s paper saw a decline.

Meanwhile, Hi-Crush Partners LP’s notes continued to trade down in the wake of its own disappointing earnings report.

McDermott International, Inc.’s issues has been struggling after reporting earnings below estimates late Tuesday.

In the retail space, Bed Bath & Beyond Inc.’s paper improved, continuing to trend higher after hitting a year-low last week.

PetSmart, Inc.’s and J.C. Penney Co., Inc.’s issues also trended positive.

Intelsat SA’s notes were heavily traded with mixed results.

Sanchez up

Sanchez Energy’s notes gained during the session, traders said.

The 6 1/8% notes due 2023 picked up 2 points to close at 39½ bid.

On Thursday morning, the Houston-based independent oil and gas producer released its third-quarter earnings report.

The company reported a loss of 15 cents per share, missing analyst predictions of a 12 cents per share loss.

However, it beat revenue predictions by reporting $277.71 million in revenue, more than 6% higher than was expected.

“I think people were just happy that the numbers weren’t worse,” a trader said.

Hornbeck rises

Elsewhere in energy, Hornbeck’s issues rose, market sources said.

The 5 7/8% notes due 2020 added 1 point to close at 77 bid.

After the close on Wednesday, the Covington, La.-based offshore transportation provider reported a 78 cents per share loss, worse than the 68 cents per share loss that was anticipated.

Its notes have been trading lower amid weakness in the offshore services space, market sources said.

Energy names trend negative

Baar, Switzerland-based peer Weatherford’s issues saw declines, traders said.

The 7¾% notes due 2021 lost 1¼ point to close at 81¾ bid. The 8¼% notes due 2023 fell 2½ points to close at 74 bid.

Its notes have been under pressure after reporting a 10 cents per share loss and $1.44 billion in revenues for the third quarter on Monday.

The company announced Thursday that it had completed the $123 million sale of its land drilling operations in Kuwait to ADES International Holding Ltd.

Meanwhile, Hi-Crush’s paper fell again.

The 9½% paper due 2026 lost ¾ point to close at 79¾ bid.

The Houston-based energy logistics company reported earnings of 36 cents per share, surpassing analyst estimates of 31 cents per share, representing a smaller profit from this time last year.

Elsewhere, Houston-based oil and gas services provider McDermott’s notes fell.

The 10 5/8% notes due 2024 shed 2½ points to close at 90¾ bid.

On Wednesday, the 10 5/8% notes lost 8¼ points.

The notes have been pushing further into distressed territory after the company reported a 20 cents per share profit for the third quarter versus analyst expectations of 29 cents.

The company also reported revenue of $2.29 billion for the third-quarter, which missed analyst expectations of revenue of $2.5 billion.

“Energy was all over the place today,” a trader said. “There wasn’t a lot of uniformity. Some of the go-go names were better while others that are just victims of the season keep getting hit.”

Bed Bath & Beyond bounces

In the retail space, Bed Bath & Beyond’s now-junk issues traded up, market sources said.

The 5.165% notes due 2044 rose 1½ points to close at 70½ bid.

“Those got knocked down recently,” a trader said. “It feels like, in retail especially right now, the market just picks someone and takes what it can for a few days.”

Last week, S&P lowered the Union, N.J.-based retailer’s issuer credit rating and issue-level rating to BB+ from BBB-.

The agency said that the downgrade to junk was due to the company’s competitive position being incompatible with an investment-grade rating.

In other retail sector activity, Phoenix-based pet supplies retailer PetSmart’s paper trended positive.

The 5 7/8% paper due 2025, while rising as high as 78 5/8 bid, ended settling just below 78½ bid, according to Trace data. The 8 7/8% paper due 2025 picked up ½ point to close at 70¼ bid.

Plano, Texas-based department store chain J.C. Penney’s 8 5/8% notes due 2025 inched up ¼ point to close at 65½ bid.

Intelsat mixed

Intelsat’s paper was mixed Thursday, traders said.

The Intelsat Jackson SA 5½% paper due 2023 picked up 1¼ points to close at 89¾ bid. The Intelsat (Luxembourg) SA 8 1/8% paper due 2023 fell 1½ points to close at 85 bid.

In its third quarter earnings statement released Tuesday, the Luxembourg-based satellite company reported a 46 cents per share loss, more than the 34 cents per share loss that analysts predicted. The company also posted $536.92 in revenues for the quarter, below the $539 million estimate.

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