L Brands notes dip on holiday sales weakness; Tenneco better amid activist pressure

By James McCandless

San Antonio, Jan. 9 – Retailers continued to hold the focus of the distressed debt market as holiday sales were revealed.

L Brands, Inc.’s notes dipped after the company released its holiday season sales data, showing weakness.

Sector peer Bed Bath & Beyond Inc.’s issues varied in direction as the market reacts to its third-quarter earnings report.

Elsewhere, auto parts maker Tenneco Inc.’s paper saw better movement as an activist investor pushes the company to complete asset sales.

As it brings a new offering to market, Range Resources Corp.’s notes tracked lower in the energy sector.

Slackened oil futures were followed by Chesapeake Energy Corp.’s and Southwestern Energy Co.’s issues while California Resources Corp.’s paper diverged.

Foodmaker Dean Foods Co.’s notes improved as the dairy space continues to experience weakness.

Meanwhile, telecom name Intelsat SA’s issues continued to gain ground.

L Brands dips

L Brands’ notes dipped as the session came to a close, traders said.

The 6¾% senior notes due 2036 shaved off ½ point to close at 90 bid. The 6 7/8% senior notes due 2035 lost ¾ point to close at 90½ bid.

Early Thursday morning, the Columbus, Ohio-based retail name released its 2019 holiday sales guidance and cut its guidance for the coming year.

The company reported sales ending Jan. 4 of about $3.9 billion, down from the previous year.

Comparable store sales fell 3% overall while Victoria’s Secret same-store sales dropped 12%.

“A lot of traditional retailers reported similar results today,” a trader said. “So the sector continues to be anemic.”

Bed Bath varies

Sector peer Bed Bath & Beyond’s long-term issues varied in direction, market sources said.

The 5.165% senior notes due 2044 picked up 1 point to close at 70½ bid. The 4.915% senior notes due 2034 fell ½ point to close at 73½ bid.

After the close on Wednesday, the Union, N.J.-based department store chain issued its third-quarter earnings report, falling well under expectations.

The name showed a loss of 38 cents per share, missing analyst predictions of a 3 cents per share profit.

Net sales also missed the mark at about $2.75 billion.

The news led to a spike in after-hours trading in the company’s structure.

Chief executive officer Mark Tritton called the results unsatisfactory and promised to execute a turnaround.

Tenneco better

Elsewhere, automotive name Tenneco’s paper saw better movement, traders said.

The 5% senior paper due 2026 gained ¼ point to close at 90¼ bid.

The Lake Forest, Ill.-based auto parts maker’s paper saw a small recovery from Wednesday’s negativity, which was sparked after announcing the departure of co-CEO Roger Wood and a warning of continuing weakness in the face of attempting to sell off its powertrain unit.

After committing to the sale in 2018, the company has faced persistent market pressures and now has an activist investor pushing for changes.

The investor is seeking a change to half of the company’s board members and a commitment to an asset sale.

Range lower

As it prices a new issue, Range Resources’ notes tracked lower, market sources said.

The 4 7/8% senior notes due 2025 dipped 1 point to close at 85¼ bid.

Late in the day on Thursday, the Fort Worth-based independent oil and gas producer priced an upsized $550 million issue of six-year senior notes at par to yield 9¼%, Prospect News reported.

The issue size increased from $500 million.

The yield printed at the wide end of the 9% to 9¼% yield talk. Initial talk had the notes coming to yield in the low 9% area.

On Wednesday, the company began a cash tender offer to purchase up to $500 million of its outstanding 5¾% senior notes due 2021, 5 7/8% senior notes due 2022 and 5% senior notes due 2022.

Also this week, it said that it would cut its drilling budget and scrap its dividend.

Oil trends down

As oil futures slackened, distressed energy names trended down, traders said.

Crude futures saw weakness as the U.S. reported a crude supply buildup.

West Texas Intermediate crude oil futures for February delivery shed 5 cents to settle at $59.56 per barrel.

North Sea Brent crude oil futures for March delivery finished at $65.37 per barrel after a 7 cent loss.

Oklahoma City-based producer Chesapeake Energy’s issues fell.

The 7% senior notes due 2024 dropped 3 points to close at 61 bid. The 11½% notes due 2025 declined by ¾ point to close at 93¾ bid.

Spring, Tex.-based peer Southwestern Energy’s paper followed the trend.

The 7½% senior notes due 2026 gave back 1¼ points to close at 90½ bid. The 7¾% senior paper due 2027 gave back 1 point to close at 94½ bid.

Los Angeles-based producer California Resources’ notes diverged in direction.

The 6% senior notes due 2024 jumped up 3 points to close at 36¼ bid. The 8% senior secured notes due 2022 shed 1¼ points to close at 42½ bid.

Dean Foods up

Dairy name Dean Foods’ issues improved, market sources said.

The 6½% senior notes due 2023 added 1 point to close at 15 bid.

News broke on Thursday that the Dallas-based dairy producer has come into conflict with Borden Dairy, another producer who filed for bankruptcy this week.

The two are in an argument over a contract to deliver dairy products to Starbucks stores in Texas, with Borden claiming that Dean is attempting to back out of the deal.

“Dean has been quiet lately,” a trader said. “Right now there’s a little more of a spotlight on the milk space with Borden’s bankruptcy.”

Intelsat gains

Throughout the session, telecom name Intelsat’s paper was seen gaining, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose 2 points to close at 63¾ bid. The 9½% senior paper due 2023 gained ½ point to close at 73¼ bid.

The Luxembourg-based satellite operator’s structure remains in high demand as the Federal Communications Commission works to establish parameters for a C-band spectrum auction.

Following a sustained lobbying effort by the company as part of the C-Band Alliance, regulators and legislators opposed the group’s push to hold a private auction between its members.

© 2015 Prospect News.
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