Denbury declines after company nixes merger; Murray Energy dips after ratings downgrade

By James McCandless

San Antonio, March 22 – Energy names remained the focus of distressed trading at the end of the week.

Denbury Resources Inc.’s notes declined after the company canceled a proposed merger when it failed to garner stakeholder support.

Oil futures were negative, though California Resources Corp.’s and EP Energy Corp.’s issues gained while Ensco plc’s paper ended mixed.

In coal, Murray Energy Corp.’s notes dipped after a ratings downgrade.

Meanwhile, Intelsat SA’s issues recovered after Thursday’s negativity spurred on by comments from the chairman of the Federal Communications Commission.

Sector peer Frontier Communications Corp.’s paper moved lower.

Retailer Revlon, Inc.’s notes were mixed as J.C. Penney Co., Inc.’s issues followed a negative path.

Denbury declines slightly

In the energy space, Denbury’s notes declined, traders said.

The 6 3/8% notes due 2021 shaved off ¼ point to close at 77¾ bid. The 7½% notes due 2024 lost ¾ point to close at 86 bid.

Late Thursday, the Houston-based independent oil and gas producer announced that it has terminated a proposed merger agreement with Penn Virginia Corp.

The merger was proposed for $1.7 billion in October.

“It was pretty maligned from the get-go,” a trader said. “Not many people wanted to see this deal go through, and the company was never able to convince them. With that dip that oil had recently, that combination didn’t make a lot of strategic sense.”

Oil names mixed

Despite negativity in oil futures, popular distressed oil tranches were mostly positive, market sources said.

Los Angeles-based producer California Resources’ issues gained.

The 6% notes due 2024 jumped 3¼ points to close at 73 bid. The 8% notes due 2022 added 1½ points to close at 80½ bid.

Houston-based sector peer EP Energy’s paper was also better.

The 8% paper due 2024 garnered ¾ point to close at 52½ bid. The 7¾% paper due 2026 rose ½ point to close at 80½ bid.

London-based contract driller Ensco’s notes closed mixed.

The 7¾% notes due 2026 lost ¾ point to close at 84¼ bid. The 7.2% notes due 2027 saw a 3-point boost to close at 84 bid.

West Texas Intermediate crude oil futures for May delivery lost 94 cents to close the week at $59.04 per barrel.

North Sea Brent crude oil for May delivery ended the week at $67.03 per barrel after losing 83 cents.

Murray dips

Elsewhere, Murray Energy’s issues dropped, traders said.

The 12% notes due 2024 shaved off ¼ point to close at 42¼ bid.

The St. Clairsville, Ohio-based coal producer received a ratings downgrade from S&P Global Ratings.

The agency lowered the company’s issuer credit rating and issue-level ratings.

The change comes from the agency’s view that “deeply discounted open market debt repurchases by distressed issuers to be tantamount to default.” The company has purchased $47.95 million of its debt at an average 40% discount.

Intelsat up, Frontier lower

Meanwhile, in telecom, Intelsat’s paper bounced up, market sources said.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 gained ½ point to close at 89¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 picked up 1¼ points to close at 72 bid.

The Luxembourg-based satellite operator’s structure has been under pressure in the last few weeks over uncertainty about use of the C-band spectrum.

In the most recent example, FCC chairman Ajit Pai told a conference that a decision on who controls access to C-band, and the revenues it may generate, is not coming in the short term.

Norwalk, Conn.-based sector peer Frontier’s notes closed the week lower.

The 11% notes due 2025 lost 1¼ points to close at 65 bid. The 10½% notes due 2022 dropped 2 points to close at 73½ bid.

Revlon mixed, J.C. Penney down

New York City-based cosmetics producer Revlon’s issues were mixed, traders said.

The 5¾% notes due 2021 fell 1½ points to close at 86 bid. The 6¼% notes due 2024 rose ½ point to close at 54¾ bid.

This week, the company signaled that it would start working with creditors to refinance $500 million of its 2021 bonds.

Plano, Texas-based department store chain J.C. Penney’s paper moved downward.

The 8 5/8% paper due 2025 lost ¾ point to close at 60¼ bid.

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