Bed Bath & Beyond down after earnings; PG&E better on fund approval

By James McCandless

San Antonio, July 11 – The distressed market on Thursday saw retail and utilities names take much of the day’s focus.

Bed Bath & Beyond Inc.’s notes headed lower after releasing a mixed first-quarter earnings report late Wednesday.

Sector peer Neiman Marcus Group, Inc.’s issues declined.

Meanwhile, in utilities, PG&E Corp.’s paper finished better after California lawmakers approved the creation of a $21 billion fund for wildfire claims.

In the medical space, Mallinckrodt plc’s notes were mixed as a subsidiary borrowed $400 million in a revolving loan.

Teva Pharmaceutical Industries Ltd., another drug maker, saw its issues drop.

Elsewhere, in energy, McDermott International, Inc.’s paper continued to climb a day after announcing a new contract.

As oil futures shifted lower, Halcon Resources Corp.’s notes moved similarly while California Resources Corp.’s issues traded mixed and Ensco Rowan plc’s paper rose.

BB&B, Neiman down

Retailer Bed Bath & Beyond’s notes moved down, traders said.

The 5.165% senior notes due 2044 dropped 4½ points to close at 68½ bid. The 4.915% notes due 2034 lost 2 points to close at 74 bid.

After the close on Thursday, the Union, N.J.-based retail name released its first-quarter earnings report, highlighted by mixed results.

The company reported a profit of 12 cents per share, beating analyst expectations of an 8 cents per share profit.

Despite the earnings beat, it also reported a 6.6% decline in net sales and a gross profit drop of 8%.

It also incurred goodwill and asset impairment charges of $448 million.

“There was just too much going on below that earnings number to ignore,” a trader said. “It’s still a long road for a lot of these retailers.

In May, under pressure from a group of activist investors to enact profit-boosting changes, then-chief executive officer Steven Temares stepped down.

Dallas-based luxury chain Neiman Marcus’ issues declined.

The 14% debentures due 2024 fell ¾ point to close at 79 bid.

PG&E better

Meanwhile, in utilities, PG&E’s paper finished the day better, market sources said.

The 3¾% senior paper due 2042 picked up 1 point to close at 92¾ bid. The 6.05% paper due 2034 gained ¼ point to close at 112¼ bid.

On Thursday, the California legislature approved legislation to create a $21 billion fund to help the state’s utilities pay claims that may arise from future wildfires.

The San Francisco-based utility filed for bankruptcy in January after warning investors that it would incur more than $30 billion in liabilities over potential wildfire claims.

Governor Gavin Newsom is expected to sign the bill.

Mallinckrodt mixed, Teva drops

In the medical space, Mallinckrodt’s notes saw a mixed session, traders said.

The 4¾% senior notes due 2023 added 3¼ points to close at 75 bid. The 5 5/8% notes due 2023 slid 5¾ points to close at 71 bid.

The Staines-upon-Thames, England-based drug manufacturer announced on Thursday that subsidiary MEH Inc. borrowed $400 million as a revolving loan under its credit facility, Prospect News reported.

The revolving loan matures on Feb. 28, 2022 and is prepayable prior to that, in whole or in part, without premium or penalty at the election of the borrowers.

After giving effect to the incremental borrowing of the revolving loan, there is $95 million of remaining availability under the facility.

Petach Tikva, Israel-based generic drug producer Teva’s issues dropped.

The 3.15% senior notes due 2026 shaved off ½ point to close at 78½ bid. The 4.1% notes due 2046 lost 3 points to close at 68¼ bid.

McDermott climbs

Elsewhere, in energy, McDermott’s paper climbed higher, market sources said.

The 10 5/8% senior unsecured paper due 2024 picked up 1 point to close at 97 bid.

On Wednesday, the Houston-based oil and gas engineering company announced that it had secured two contracts worth $4.5 billion from Saudi Aramco.

In the first contract worth more than $3 billion, the company will offer engineering, procurement, construction, and installation of a gas-oil separation plant.

The second contract, pegged at about $1.5 billion, will involve constructing offshore gas facilities and pipelines.

Energy names mixed

Despite an oil futures slip, energy tranches were mixed, traders said.

Houston-based independent oil and gas producer Halcon Resources’ notes declined.

The 6¾% senior unsecured notes due 2025 fell 7 points to close at 25 bid.

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

The 6% senior unsecured notes due 2024 gained ½ point to close at 60½ bid. The 8% notes due 2022 lost ¾ point to close at 74¼ bid.

London-based contract driller Ensco Rowan’s paper rose.

The 5.2% senior paper due 2025 inched up ¼ point to close at 75½ bid. The 7¾% paper due 2026 added ½ point to close at 78 bid.

West Texas Intermediate crude oil futures for August delivery shed 23 cents to settle at $60.20 per barrel at the end of the session

North Sea Brent crude oil futures for September delivery ended up at $66.52 per barrel after a 49-cent loss.

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