Revlon issues continue climb on CEO departure news; Sears Holdings notes fall again on layoff report

By James McCandless

San Antonio, Jan. 31 – Traders characterized Wednesday as a less-than-quiet day, as the distressed debt market’s most popular names of recent weeks sustained trading activity.

Revlon, Inc. notes continued to trade higher on Monday’s news that chief executive officer Fabian Garcia would be departing the company after not being able to reverse revenue losses in recent years.

Issues in Sears Holdings Corp. sunk further as the company announced layoffs in its corporate offices in what traders described as yet another cost-cutting measure to delay insolvency.

Some of the most well known names in the distressed market, such as Frontier Communications Corp. and Intelsat SA, continued to be heavily traded.

The energy space remained active, as Armstrong Energy, Inc. and FirstEnergy Solutions Corp. had traders reacting to negative news while EP Energy and Northern Oil and Gas, Inc. were high volume favorites.

Revlon notes rise again as CEO leaves

For a second straight day, notes of the New York City-based cosmetics producer Revlon traded up on Monday’s announcement of the departure of CEO Fabian Garcia as the company looks for ways to increase revenue, according to a trader. The company estimates a projected $165 to $185 million loss for 2017.

“They have to increase online sales,” the trader said. “Otherwise the next few years are going to be just as rough as the last few.”

The 5¾% issues due 2021 edged up to close above 76 bid. The 6¼% issues jumped up 1½ points to close around 66½ bid.

Sears paper slides as layoffs announced

Hoffman Estates, Ill.-based retailer Sears Holdings saw its paper fall again as the company announced late Wednesday that 220 corporate positions would be cut in another cost saving maneuver, market sources confirmed. The 6 5/8% paper due 2018 fell off to close at just under 81 bid. The 8% paper due 2019 fell ½ point to close at 46½ bid.

“Any move they can think of to keep themselves running, you’ll see it over the coming months,” a trader said.

Telecom favorites active again

Notes in the Norwalk, Conn.-based wireline telecom name Frontier Communications continued to reverse last week’s gains that stemmed from the company increasing its debt flexibility with amendments to their credit agreements, a trader said. The 7 5/8% notes due 2024 fell almost 1½ point to close above 65½ bid. The 10½% notes due 2022 fell almost ¼ point to finish just above 82¾ bid. The 11% notes due 2025 lost almost 3 points to close at below 76 bid.

Trading volume also remained high in Luxembourg-based satellite communications company Intelsat. The Intelsat Jackson SA 7¼% notes due 2020 shifted slightly downward to close below 87½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 gained ½ point to close at 42½ bid while the 7¾% notes due 2021 took a sharp drop to finish at just above 45 bid.

Energy trades on bad news and volume favorites

Bonds in St. Louis-based coal producer Armstrong Energy, Inc. rose while the company announced a $4.6 million operating loss for December (see related story elsewhere in this issue). The 11¾% bonds due 2019 gained over ½ point to close above 21 ½ bid.

Notes in the Akron, Ohio-based electricity company FirstEnergy Solutions were active on Wednesday’s news that Standard & Poor’s downgraded its debt and affirmed a negative outlook (see related story elsewhere in this issue). The 6½% notes due 2021 fell more than ¼ point to close at 46¾ bid as the 6.85% bonds due 2034 jumped 1¼ point to close at 40 bid.

Houston-based oil and gas company EP Energy’s notes where active again. The 7¾% issues due 2022 gained ½ point to close at 73½ bid. The 6 3/8% issue due 2023 fell off about a point to close at under 66 bid.

Traders reported a spike in activity for notes in Minnetonka, Minn.-based independent oil and gas company Northern Oil and Gas. The 8% notes due 2020 fell slightly, closing a hair shy of 85 ¾ bid. The 8% notes due 2020 also fell, ending the day at 80 ½ bid.

“People like [Northern Oil and Gas] as a non-operator,” a trader said. “They just own land and contract that out to operators. It’s been rallying since the fall and it’s not completely leveraged on the underlying commodity of crude oil.”

© 2015 Prospect News.
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