Energy names better in line with higher oil prices; Peabody up on credit facility change

By Paul Deckelman

New York, Feb. 6 – The distressed debt market was relatively sedate on Friday, traders said, with no names standing out in particular.

They said that much of the attention of investors was focused on the high-yield primary market, which has seen active new issuance all week, plus robust trading in the secondary market for many of the larger new deals. Such was also the case on Friday, with the pricing and subsequent move upward in trading of deep-discount retailer Dollar Tree, Inc.’s massive $3.25 billion two-part deal.

Back among the more challenged junk credits, traders said that the volatile energy sector – which has been yo-yoing up and down along with crude oil prices – was better for a second consecutive session, in line with an improvement in oil levels.

Among the beneficiaries were sector bellwether California Resources Corp., Linn Energy LLC and Energy XXI Gulf Coast, Inc.

Coal operator Peabody Energy Corp.’s bonds were better in fairly active dealings as the company and its lenders reached agreement on amending its credit facility.

On the downside, retailer Claire’s Stores Inc.’s bonds remained under pressure.

Fellow retailer RadioShack Corp.’s bankruptcy filing on Thursday was long-expected and was treated pretty much like a non-event. Sprint Corp. – which will establish a presence in the between 1,500 and 2,400 RadioShack stores that are to be sold via the bankruptcy process to General Wireless Inc., an affiliate of Standard General LP – was better on the session.

Energy names on the upside

A trader said that “oil prices were up by more than a dollar” – the March contract for West Texas Intermediate crude actually gained $1.86 on the day, or 3.68%, finishing at $52.34 per barrel.

With oil and gas names mostly better, “CalRes led the charge volume-wise” among junk and distressed oil and natural gas names, he said.

He saw the Los Angeles-based exploration and production company’s benchmark 6% notes due 2024 firming to 87½ bid, 87¾ offered.

A second trader saw those bonds at 87¾ bid, 88½ offered, up from 86½ bid, 87½ offered on Thursday.

Another name seen doing better was Houston-based Linn Energy. Its 7¾% notes due 2021were up by as much as 3 points on the day at 82½ bid.

The trader saw “a bunch” of Energy XXI 9¼% notes due 2017 “up a good 1½ points,” trading between 63 ½ and 64 bid.

Besides the overall rise in the energy sector in line with higher oil prices, he said that he had “seen a headline out that they may buy back some bonds.”

A second trader put those bonds at 64 bid, up 1¾ points on the day, on volume of about $6 million.

He saw the company’s 6 7/8% notes due 2024 up 2 points at 49¼ bid, though only on volume of $4 million.

Peabody gets credit boost

Also in the energy sphere, a trader said that Peabody Energy “was fairly active on their credit facility revisions, so the bonds in that name were up by a bunch.”

However, he said that “they came off their highs of the day.”

He saw the St. Louis-based coal producer’s 6½% notes due 2020 get as good as 82-83 before finishing around an 80-81 context, “but they had been in the upper 70s, so they definitely were up on the day.” Over $13 million traded.

He saw the 6% notes due 2018 finishing at 86-87, “a little off their highs,” but still up from prior levels around 82-83, on volume of around $11 million.

Claire’s seen lower

Away from the energy arena, a trader said that “Claire’s stores remained under pressure,” although he said he had seen no fresh news out about the Hoffman Estates, Ill.-based specialty retailer that might explain its current weakness.

He saw its 9% 2019 first-lien notes ending at 90½ bid.

A second trader noted that the bonds had fallen to around a 92¾ bid level on Thursday from around 93½ earlier in the week, and then continued to drop on Friday, to 90¾ bid, down a deuce on the session, on volume of over $12 million.

Its unsecured 8 7/8% notes due 2019 lost ¾ point to finish at 63½ bid, though on only very light volume, with just one round-lot trade. Earlier in the week, the bonds had hovered around 67 bid.

RadioShack activity dull

An even worse-off retailer – RadioShack Corp. – “was hardly seen in the market,” a trader said, noting that the Fort Worth-based consumer electronics store chain operator’s bankruptcy filing on Thursday surprised exactly nobody and thus was considered essentially a non-event.

“Very little was trading,” said another market source, who added that there had been just one round-lot trade in its 6¾% notes due 2019, around the 16 bid level. He saw “a one-off smaller trade” around 15.

A trader meanwhile called Sprint Corp.’s bonds “a little bit better,” seeing the Overland Park, Kans.-based Number-Three U.S. wireless company’s 7 1/8% notes due 2024 up 1 point at 100¾ bid, from prior levels in the mid-99 range.

Sprint has agreed to establish a “store-within-a-store” presence in the between 1,500 and 2,400 RadioShack stores that are to be sold via the bankruptcy process to General Wireless Inc., an affiliate of Standard General LP.

The remainder of RadioShack’s more than 4,000 outlets not sold to General Wireless, will be closed.

© 2015 Prospect News.
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