California Resources climbs after Q1 report tops expectations; PetSmart rebounds after Thursday decline

By James McCandless

San Antonio, May 4 – Traders reported lower activity in the distressed debt market to close the week.

California Resources Corp. notes rose after the company posted earnings that outpaced analyst estimates.

PetSmart, Inc. issues gained slightly after a Thursday slide precipitated by Amazon announcing that it would offer an in-house dog food brand to Prime subscription customers.

Community Health Systems, Inc. paper was active and closed up as the company prepares for more asset sales to combat its debt issues.

Intelsat SA notes were down. The company posted its Q1 report on Tuesday, missing analyst estimates. Another telecom name that posted Q1 numbers Tuesday was Frontier Communications Corp., surpassing analyst estimates. Mallinckrodt plc traded up slightly to end the week.

California Resources up

Los Angeles-based independent oil and gas producer California Resources notes traded up after the company posted its unexpectedly positive Q1 report early Friday, traders confirmed. The company surprised the market with earnings at 18 cents per share where analysts expected a loss of 75 cents per share.

The company also outperformed production estimates by reporting an average production of 123,000 barrels of oil per day.

“A lot of this is going to depend on how oil does,” a trader said. “They have a lot of debt, so if they start making less money if oil dips then they’ll be in trouble.”

The 6% notes due 2024 gained about 2 points to close at 75 bid. The 8% notes due 2022 jumped up 3½ points to close at 89 bid.

PetSmart gains

Phoenix-based pet retailer PetSmart issues gained back some of the losses experienced Thursday, a market source confirmed, taking a dive after Amazon.com, Inc. announced that it would launch an in-house dog food brand for subscribers of its Amazon Prime service.

The 8 7/8% notes due 2025 rose ½ point to close at 54¾ bid. The 5 7/8% notes due 2025 traded up about ¼ point to close at 70¼ bid.

On Thursday, the 8 7/8% notes dropped about 3¼ points and the 5 7/8% notes lost 1¾ points.

Community Health higher

Franklin, Tenn.-based hospital operator Community Health Systems closed the week up, traders confirmed, after the company cautioned investors on Wednesday that it will continue with its planned asset sales in order to reduce its debt. The company has already sold six hospitals this year as part of the plan.

The 7 1/8% paper due 2020 gained ½ point to close at 82¾ bid. The 6 7/8% paper due 2022 rose about 1¼ points to close at around 54¾ bid.

The 7 1/8% paper lost about ½ point and the 6 7/8% notes fell 1 point.

Volume names trade

Luxembourg-based satellite communications company Intelsat closed lower on Friday. On Tuesday, the company reported a 56 cents per share loss, falling short of the 41 cents per share expected by analysts.

The Intelsat (Luxembourg) SA 7¾% paper due 2021 lost about ½ point to close at 70½ bid. The 8 1/8% paper due 2023 shaved off about ½ point to close at 65 bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications issues were mixed to end the week. On Tuesday, the company posted its Q1 report that included a loss of 58 cents per share and $2.20 billion in revenue, exceeding analyst estimates.

The 7 5/8% notes due 2024 shaved off ¾ point to close at 69 bid. The 10½% notes due 2022 jumped up about 1½ points to close at around 91½ bid. The 11% notes due 2025 traded up about ¾ point to close at around 81¼ bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 gain about ½ point to close at around 72½ bid.

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