Sears mixed as company announces closure of 46 stores; Ultra Resources rises, receives downgrade

By James McCandless

San Antonio, Aug. 23 – Trading in the distressed debt market refocused on news-driven names Thursday.

Sears Holdings Corp. notes were mixed as the company announced that it would be shuttering 46 underperforming stores by November.

Ultra Resources Inc. issues improved as the company received a ratings downgrade as the market reached the close.

Sanchez Energy Corp. paper declined, ending an upward trend as the company followed oil futures.

Intelsat SA notes were mixed again. Recently, a subsidiary priced a $1.25 billion issue of senior notes.

Frontier Communications Corp. issues continued to trade mixed. The company posted a disappointing earnings report recently.

J.C. Penney Co., Inc. paper gained again. On Tuesday the company was issued a ratings downgrade due to a worse than expected earnings report.

Sears mixed

Hoffman Estates, Ill.-based departments store name Sears’ notes were mixed, traders said, as the company announced the coming closure of 46 underperforming locations by November. The company also announced recently that its Kenmore brand will be purchased by chief executive officer Eddie Lampert’s ESL Investments after a long period of seeking a buyer.

“Lampert is pulling every string he has and using every move he can find to keep Sears from sinking,” a trader said. “It’s a worthy effort, but it’ll probably go bankrupt next year.”

The 6 5/8% notes due 2018 rose about 2¼ points to close at 93½ bid. The 8% notes due 2019 lost about ¾ point to close at around 37¼ bid.

Ultra Resources up

Ultra Resources, a Houston-based subsidiary of independent oil and gas producer Ultra Petroleum Corp., saw issues gain as market sources said the company received a ratings downgrade towards the end of Thursday trading. Moody’s Investors Service downgraded its corporate family rating and several issue-level ratings (see related story elsewhere in this issue).

Its parent company recently reported a 17 cents per share profit, falling short of analysts estimates of 18 cents per share profit. It also reported $190.14 million in revenues.

The 7 1/8% notes due 2025 gained 3 points to close at 47¾ bid.

Sanchez Energy declines

Elsewhere in energy, Houston-based independent oil and gas name Sanchez Energy paper declined, traders said. Recently, the company reported a 26 cents per share loss in its second-quarter earnings statement, missing analyst expectations of 6 cents per share profit. Its oil production numbers fell short of its own guidance.

“Sanchez usually trends with oil futures, and those didn’t really settle on a direction today,” a trader said.

The 6 1/8% notes due 2023 lost about 1½ points to close at 57½ bid.

On Wednesday, the 6 1/8% notes rose about 2½ points

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed. Recently, subsidiary Intelsat Connect Finance SA priced $1.25 billion of senior notes due 2023.

In a recent second-quarter earnings report, the company showed a 38 cents per share loss. It also reported $537.71 million in revenues.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 shaved off about ¾ point to close at 96¼ bid. The 8 1/8% notes due 2023 picked up about 1½ points to close at 87 bid.

On Wednesday, the 7¾% notes rose about ¼ point and the 8 1/8% notes lost about 2¼ points.

Norwalk, Conn.-based wireline communications name Frontier Communications issues continued a mixed trajectory. Recently, after a disappointing than expected earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 lost about 1½ points to close at around 66 bid. The 10½% notes due 2022 added about ¾ point to close at around 90¼ bid. The 11% notes due 2025 dropped about 2 points to close at around 79 bid.

On Wednesday, the 7 5/8% notes rose about ¾ point, the 10½% notes lost about 1 point and the 11% notes gained about 1½ points.

Plano, Texas-based department store chain J. C. Penney paper rose. Last Thursday, the company reported a 38 cents per share loss, falling short of analyst predictions of a 5 cents per share loss. It also posted $2.83 billion in revenue. The report led to a string of ratings downgrades.

The 7.4% bonds due 2037 rose 1¼ points to close at 51 bid.

On Wednesday, the 7.4% bonds gained about 1½ points.

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