Neiman Marcus falls on creditor resistance; Weatherford crashes with crude futures

By James McCandless

San Antonio, Dec. 20 – The Thursday session in the distressed space saw losses across the board.

Neiman Marcus Group, Inc.’s notes fell as the company continues to face resistance from creditors over a possible restructuring.

Meanwhile, Rite Aid Corp.’s issues were trending upward but ended flat after beating earnings expectations.

Sector peer PetSmart, Inc.’s paper moved lower.

Elsewhere, in energy, Weatherford International plc’s notes crashed on a negative day for oil futures. The company received a ratings downgrade Thursday.

The session also saw weakness in Sanchez Energy Corp.’s and Ensco plc’s issues, while California Resources Corp.’s paper was mixed.

Away from oil, Ferrellgas Partners LP’s notes were declining.

Community Health Systems, Inc.’s issues were also negative.

Neiman Marcus falls

Neiman Marcus’ notes were falling Thursday, traders said.

The 8% notes due 2021 lost 3¾ points to close at 41 bid.

The Dallas-based luxury retailer is facing renewed resistance to a potential restructuring agreement for its 2020 and 2021 debt.

“There’s been a lot of chatter today about continuing animosity,” a trader said. “That creates uncertainty, hence the drop.”

Major creditor Marble Ridge Capital recently sued the company after it transferred e-commerce segment MyTheresa into private equity.

The company has countersued.

The notes have been on a downward trend amid prolonged restructuring negotiations with creditors.

Rite Aid flat, PetSmart falls

Elsewhere in the retail space, Rite Aid’s issues were active but flat.

The 7.7% notes due 2027, while rising as high as 69½ bid in intraday activity, ended level at 67 bid, according to Trace data.

After the Wednesday close, the Camp Hill, Pa.-based drug store chain reported third-quarter earnings of 1 cent per share, beating analyst predictions of a 2 cents per share loss.

Revenues were reported at about $5.45 billion.

The company’s issues have been under pressure in a year of underwhelming earnings and a nixed merger with grocery chain Albertson’s.

Phoenix-based sector peer PetSmart’s 5 7/8% paper due 2025 fell 1½ points to close at 71 bid.

Weatherford crashes

Weatherford’s notes tumbled, market sources said.

The 8¼% notes due 2023 dropped 4¼ points to close at 59¼ bid. The 9 7/8% notes due 2024 shaved off 4 points to close at 59½ bid.

More softness in oil futures continued to make the Baar, Switzerland-based oilfield services provider a target for negativity.

After market close on Thursday, Moody’s Investors Service downgraded the company’s corporate family rating, probability of default rating, senior unsecured note rating and speculative grade liquidity rating.

“There was already blood in the water, so to speak,” a trader said. “The downgrade might send them further into the abyss tomorrow.”

The company recently received a delisting warning from the New York Stock Exchange.

Energy down, mixed

In other energy trading, Houston-based independent oil and gas producer Sanchez Energy’s issues were also negative.

The 6 1/8% notes due 2023 shed 3 points to close at 16½ bid.

London-based contract driller Ensco’s paper followed the negative trend.

The 7¾% paper due 2026 cratered 5¾ points to close at 72¾ bid. The 7.2% paper due 2027 lost 1¼ points to close at 77 bid.

Los Angeles-based peer California Resources’ notes were mixed.

The 6% notes due 2024 added 4½ points to close at 64½ bid. The 8% notes due 2022 fell 2¾ points to close at 65¾ bid.

In the Thursday session, West Texas Intermediate crude oil futures for February delivery fell $2.29 to close at $45.88 per barrel.

North Sea Brent futures lost $2.89, ending at $54.35 per barrel.

Ferrellgas down

Away from oil, Ferrellgas’ issues were also declining, traders said.

The 6¾% notes due 2022 shaved off ¼ point to close at 81¾ bid. The 6¾% notes due 2023 dropped 2¾ points to close at 80 bid.

“With all the attention being paid to oil names, this one has been kind of a sleeper as it tailspins,” a trader said.

The Overland Park, Kan.-based propane name has been under pressure as it faces liquidity issues, encapsulated by the company suspending quarterly cash distributions.

On Monday, Moody’s downgraded its corporate family rating, probability of default rating, speculative grade liquidity rating and senior unsecured notes ratings.

Community Health lower

Community Health’s paper followed the market’s negative trend, market sources said.

The 6 7/8% paper due 2022 dropped 1½ points to close at 46 bid. The 6¼% paper due 2023 lost 1¼ points to close at 90½ bid.

The Franklin, Tenn.-based hospital operator, along with other distressed healthcare names, have seen losses this week after a recent ruling from a federal judge in Texas declared the individual mandate provision in the Affordable Care Act unconstitutional, restarting legal dispute over the law.

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