L Brands notes move up on earnings beat; United Airlines rises despite forecast

By James McCandless

San Antonio, Nov. 19 – Distressed debt trading focused again on retail and travel names on Thursday.

L Brands, Inc.’s notes finished the day moving up after the company reported better-than-expected numbers for the third quarter.

Sector peer Rite Aid Corp.’s issues varied in direction.

Meanwhile, air carrier United Airlines Holdings, Inc.’s paper rose despite issuing a grim short-term forecast.

American Airlines Group Inc.’s notes diverged.

In the oil and gas space, Occidental Petroleum Corp.’s issues gained in the midst of receiving a ratings downgrade.

As oil futures took a haircut, Gulfport Energy Corp.’s paper followed while Antero Resources Corp.’s notes saw mixed results and SM Energy Co.’s issues picked up steam.

Elsewhere, GTT Communications, Inc.’s paper improved as the company reportedly holds talks with creditors for a short-term loan.

L Brands improves

L Brands’ notes finished the day moving higher on Thursday, traders said.

The 6¾% senior notes due 2036 garnered 2 points to close at 106¾ bid. The 5¼% senior notes due 2028 improved by 1¼ points to close at 103 bid.

After the close on Wednesday, the Columbus, Ohio-based specialty store company released its results for the third quarter.

L Brands reported earnings per share of $1.13, far outpacing the 6 cents per share profit that analysts had expected.

Revenues were also higher than predicted at $3.06 billion.

L Brands’ struggling Victoria’s Secret brand also had a positive quarter, showing a 4% comparable-store sales increase and a 42% increase in direct business sales.

Sales in the company’s Bath & Body Works segment rose 55%.

“I think they have a chance to post numbers like this for the next quarter, but going into next year it will be difficult for them to match,” a trader said.

Camp Hill, Pa.-based drug store chain Rite Aid’s issues varied in direction.

The 7.7% senior debentures due 2027 pushed up 1 point to close at 82½ bid. The 8% notes due 2026 shaved off ¼ point to close at 100¼ bid.

Airlines active

Meanwhile, air carrier United Airlines’ paper rose, market sources said.

The 5% senior notes due 2024 grabbed 1½ points to close at 97¾ bid. The 4¼% senior notes due 2022 improved by ½ point to close at 99 bid.

The Chicago-based airline’s structure was lifted despite issuing a warning of worse-than-projected flight capacity for the current quarter.

In a filing with the Securities and Exchange Commission, the company said that flight cancellations have been rising through the week of Nov. 18.

The company said that the current quarter capacity would be lower than the previous year and that it did not expect a linear recovery in the coming months.

In the note, United Airlines said that it “continues to expect total revenue to be down by approximately 67% in the fourth quarter of 2020 as compared to the fourth quarter of 2019.”

Fort Worth-based air travel company American Airlines’ notes diverged.

The 5% senior notes due 2022 edged ¾ point lower to close at 77¾ bid. The 11¾% senior notes due 2025 rose 1 point to close at 108 bid.

Occidental gains

In the oil and gas space, Occidental Petroleum’s issues gained, traders said.

The 2.9% senior notes due 2024 moved up 1 point to close at 92¾ bid. The 2.7% senior notes due 2022 reached up ¾ point to close at 98 bid.

During the Thursday session, the Houston-based independent oil and gas producer received a ratings downgrade from S&P Global Ratings.

The agency lowered the company’s issuer credit rating and unsecured issue-level ratings, maintaining a negative outlook.

S&P cited the company’s continuously burdensome capital structure, which remains highly leveraged after its acquisition of Anadarko Petroleum and will remain so in a weakened industry.

Last week, Occidental reported its third-quarter earnings, highlighted by a 84 cents per share loss and about $3.28 billion in revenue.

Oil names drift apart

As oil futures took a haircut, distressed energy tranches drifted apart, market sources said.

West Texas Intermediate crude oil futures for January delivery shed 11 cents to close at $41.90 per barrel.

North Sea Brent crude oil futures for January delivery settled at $44.20 per barrel after a 14 cent loss.

Oklahoma City-based producer Gulfport Energy’s paper followed futures downward.

The 6 5/8% senior notes due 2023 sank 1 point to close at 55½ bid. The 6 3/8% senior paper due 2025 edged ¾ point lower to close at 56 bid.

Denver-based E&P company Antero Resources’ notes saw mixed results.

The 5 5/8% senior notes due 2023 were docked 2 points to close at 88¼ bid. The 5% senior notes due 2025 held level to close at 76½ bid.

SM Energy, another Denver-based peer, saw its issues pick up steam.

The 6 1/8% senior notes due 2022 shot up 3 points to close at 87 bid. The 6¾% senior notes due 2026 rose 1¾ points to close at 49¼ bid.

GTT improves

Elsewhere, GTT’s paper improved as the day ended, traders said.

The 7 7/8% senior notes due 2024 garnered 2 points to close at 35 bid.

Late Wednesday, reports indicated that the McLean, Va.-based cloud networking services provider is holding talks with existing creditors for a short-term loan.

The loan, pegged at between $200 million and $300 million, is being sought to keep the company operating while it completes the sale of its infrastructure in 2021.

Last month, GTT announced that it had reached an agreement to sell its infrastructure unit to private equity firm I Squared Capital for up to $2.15 billion.

© 2015 Prospect News.
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