Tenneco notes drop as new issue prices; Peabody Energy in focus as ratings lowered

By James McCandless

San Antonio, Nov. 13 – Auto and energy names were the focus of distressed debt trading on Friday.

Tenneco Inc.’s notes dropped as the company brought a $500 million eight-year issue of senior secured notes to market.

Meanwhile, coal miner Peabody Energy Corp.’s issues varied in direction after receiving a ratings downgrade.

Property owner Washington Prime Group Inc.’s paper was under water after a getting its own ratings cut.

Sector peer CBL & Associates Properties, Inc.’s notes diverged.

As oil futures ended the week in decline, Occidental Petroleum Corp.’s and Antero Resources Corp.’s issues saw mixed results while Callon Petroleum Co.’s paper rose.

Elsewhere, in retail, Revlon, Inc.’s notes improved a day after releasing the final results of an exchange offer run by a subsidiary.

Specialty store name L Brands, Inc.’s issues pushed up.

Tenneco drops

Tenneco’s notes were seen dropping as the week reached its conclusion, traders said.

The 5% senior notes due 2026 lost 1 point to close at 82¾ bid.

During Friday’s activity, the Lake Forest, Ill.-based automotive parts maker priced a $500 million issue of senior secured notes due Jan. 15, 2029 at par to yield 7 7/8%, Prospect News reported.

The yield came down from around 8¼% in initial talk.

Also on Friday, the company announced that it would redeem the €415 million of its outstanding 4 7/8% senior secured notes due 2022 in full on Dec. 14.

The redemption price is 101.21875 plus accrued interest to but excluding the redemption date, equal to €1,020.1771 per €1,000 principal amount.

Since the onset of the coronavirus pandemic, the company has underperformed earnings expectations.

Peabody varies

Meanwhile, coal miner Peabody Energy’s issues varied in direction, market sources said.

The 6% notes due 2022 tacked on 1 point to close at 41¼ bid. The 6 3/8% notes due 2025 shaved off ½ point to close at 27 bid.

On Friday morning, the St. Louis-based coal mining company received a ratings downgrade from Moody’s Investors Service.

The agency slashed the name’s corporate family rating, senior secured debt ratings and speculative grade liquidity rating.

All ratings were placed on review for downgrade and the outlook was revised to under review.

Moody’s said that Peabody’s new ratings reflected its “eroding liquidity and an increased likelihood of a debt restructuring.”

The company released its earnings report for the third quarter on Monday, showing a loss of 66 cents per share and revenues of $671 million.

As part of the report, the company cast doubt on its ability to remain a going concern.

Washington Prime down

Property owner Washington Prime’s paper was under water, traders said.

The 6.45% senior notes due 2024 gave up 1¾ points to close at 56¼ bid.

After the close on Thursday, the Columbus, Ohio-based real estate investment trust also had its rating slashed.

S&P Global Ratings lowered the company’s overall rating to CC from CCC and its unsecured debt to C from CCC-.

In a note, the agency said that the change reflects its opinion that a technical default is expected in the near term.

Washington Prime has said recently that it is in negotiations with creditors in the hopes of deleveraging its balance sheet, which S&P would consider tantamount of default.

The outlook is negative.

Chattanooga, Tenn.-based mall name CBL’s notes diverged.

The 5¼% senior notes due 2023 shed ½ point to close at 38 bid. The 4.6% senior notes due 2024 pushed up 1½ points to close at 40 bid.

Oil names in focus

As oil futures ended the week with declines, distressed energy names were pulled in different directions, market sources said.

West Texas Intermediate crude oil futures for December delivery lopped off 99 cents to settle the week at $40.13 per barrel.

North Sea Brent crude oil futures for January delivery finished at $42.78 per barrel after a 75 cent slip.

Houston-based independent oil and gas producer Occidental Petroleum’s issues saw mixed results.

The 2.9% senior notes due 2024 held level to close at 90¼ bid. The 2.7% senior notes due 2022 improved by ½ point to close at 96½ bid.

Denver-based producer Antero Resources’ paper was also seen moving on separate paths.

The 5 1/8% senior notes due 2022 were docked 2 points to close at 92 bid. The 5 5/8% senior paper due 2023 gained ¼ point to close at 89¾ bid.

Houston-based E&P company Callon Petroleum’s notes rose.

The 6 1/8% senior notes due 2024 picked up 1¼ points to close at 39¼ bid.

Revlon, L Brands up

Elsewhere, in the retail space, Revlon’s issues improved, traders said.

The 5¾% senior notes due 2021 scooped up 6½ points to close at 100 bid. The 6¼% senior notes due 2024 moved up 2½ points to close at 27½ bid.

The New York-based cosmetics producer’s structure continued to see attention on Friday, a day after announcing that $236.5 million of the outstanding $342,785,000 of its 2021 notes had been tendered for exchange in a subsidiary’s offer.

Revlon Consumer Products Corp. offered to exchange the notes for cash or a combination of cash and ABL FILO term loans and new BrandCo second-lien term loans.

The company said that it expects to redeem the remaining $106.8 million of notes on Dec. 14 at par plus interest to but excluding the redemption date.

Columbus, Ohio-based specialty store name L Brands’ paper pushed up.

The 6¾% senior notes due 2036 garnered ¼ point to close at 102¼ bid. The 5¼% senior notes due 2028 rose ¾ point to close at 99¾ bid.

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