California Resources notes improve before ratings upgrade; Neiman Marcus paper gains

By James McCandless

San Antonio, Sept. 21 – The last day of trading for the week saw a continued focus on retail and telecom names in distressed debt.

California Resources Corp.’s notes improved on Friday. After the close, the company received a ratings upgrade.

Neiman Marcus Group, Inc.’s issues traded up slightly as investors digested news that an investor has filed a complaint regarding a recent private equity transfer.

Meanwhile, Intelsat SA’s paper and Frontier Communications Corp.’s notes were mixed in trading.

American Tire Distributors’ issues ended the week level.

Mallinckrodt plc improved in the medical space.

California Resources rises

California Resources’ notes trended upward on Friday, traders said.

The 6% notes due 2024 rose 1½ points to close at 85 bid. The 8% notes due 2022 added ½ point to close at 92 bid.

The notes tracked the movement of oil futures.

After the close on Friday, S&P Global Ratings raised the company’s issue-level rating on its senior secured second-lien debt to B- from CCC+ and revised the recovery rating on the debt to 2 from 4. The agency also affirmed the B issue-level rating on the company’s senior secured first-lien debt and the CCC- issue-level rating on its senior unsecured debt.

California Resources is a Los Angeles-based independent oil and gas producer.

Neiman Marcus up

In the retail space, Neiman Marcus’ notes edged higher, traders said.

The 8% notes due 2021 rose about ½ point to close at 69½ bid.

Debt investor Marble Ridge claimed on Friday that the company may be in default as a result of its recent private equity transfer of e-commerce segment MyTheresa.

The company disclosed the news as part of its recent earnings release, where the company reported rising sales and revenue and a net loss of $75.3 million for the fourth quarter of 2018. Adjusted EBITDA was $56.1 million for the fourth quarter and $477.1 million for the fiscal year.

“The same thing happened with PetSmart and it’s not doing them any favors,” a trader said, referring to a recent equity transfer of a large stake in its e-commerce arm Chewy.com into private equity and out of creditors’ hands. “They’ve got to be careful not to lose the trust of the bondholders.”

Neiman Marcus is a Dallas-based luxury department store chain.

Intelsat mixed

Elsewhere, Intelsat’s paper ended mixed, market sources said.

The Intelsat Jackson SA 5½% paper due 2023 shaved off ¼ point to close at 91¼ bid. The Intelsat (Luxembourg) SA 8 1/8% paper due 2023 rose 1½ points to close at 87½ bid.

On Thursday, the 5½% notes and the 8 1/8% notes were level.

After the close Wednesday, Intelsat Jackson announced the results of a recent cash tender offer for its 7¼% senior notes due 2020.

In total, $1,723,269,000 of the aggregate principal amount was validly tendered by the expiry date.

Intelsat is a Luxembourg-based satellite communications company.

Volume names trade

Frontier Communications, another distressed telecom stalwart, was mixed to close the week.

The 7 5/8% notes due 2024 rose 1 point to close at 66 bid. The 10½% notes due 2022 were level at 90 bid. The 11% notes due 2025 picked up ¼ point to close at 80 bid.

Meanwhile, Huntersville, N.C.-based tire distributor American Tire’s issues were active but level.

The 10¼% notes due 2022 were flat at 24½ bid.

In the medical space, Staines-upon-Thames, U.K.-based drug maker Mallinckrodt’s paper capped off the week with a gain.

The 4¾% paper due 2023 rose ½ point to close at 86½ bid.

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