Hexion notes remain in focus; Nine West rises on amended bankruptcy plan; Ultra Petroleum downgraded

By James McCandless

San Antonio, Oct. 18 – Trading in the distressed debt space continued to focus on the news-driven names of the week on Thursday.

Hexion Inc.’s notes improved as holders continued organizing for upcoming debt talks with the company.

In retail, Nine West Holdings Inc.’s issues improved after the company filed an amended bankruptcy plan.

Elsewhere in the sector, Rite Aid Corp. paper fell while L Brands, Inc. rebounded.

In the energy space, Ultra Petroleum Corp.’s notes declined as ratings agencies increased scrutiny after the company announced exchange agreements for the notes.

Meanwhile, Sanchez Energy Corp. and PHI, Inc. saw similar weakness in the sector.

Natural gas name FerrellGas Partners LP paper gained.

iHeartMedia Inc. notes improved amid a dispute between legacy holders and the company.

Hexion gains

Hexion’s notes remained a top target in distressed activity, traders said.

The 6 5/8% notes due 2020 rose 1¾ points to close at 90¾ bid. The 9% notes due 2020 picked up about 1¾ points to close at 71¼ points.

The Columbus, Ohio-based chemicals producer’s 2020 tranches have been heavily traded and moving lower this week as their holders prepare for debt talks over $2.4 billion in securities that will be maturing.

“Hexion just dominated focus today,” a trader said. “Something new is that there were people lining up behind some 2022 notes.”

The 13¾% notes due 2022, trading with an 87 handle this time last month, were seen in the high 70s to end the day at 78¾ bid, according to Trace data.

Nine West improves

Nine West issues improved, market sources said.

The 6 1/8% bonds due 2034 rose about 4 points to close at around 15 bid.

Notes jumped after the White Plains, N.Y.-based bankrupt retailer filed an amended bankruptcy plan late Wednesday.

The plan will provide value by settling estate claims and causes of action against indirect equity owners Sycamore Partners Management, LP and affiliates of KKR Credit Advisors (US) LLC on account of the 2014 transaction and carve-out transaction, Prospect News reported.

The plan, subject to court approval, also reduces Nine West’s total funded debt by more than $900 million.

“Some of the unsecured holders aren’t satisfied with the plan,” a trader said. “So it’s another interesting name to watch in this sector.”

The company declared bankruptcy in April as the notes were trading around 4 bid, reaching as high as 31 in June, according to Trace data.

Elsewhere in the sector, Camp Hill, Pa.-based drugstore retailer Rite Aid’s paper declined.

The 6 1/8% paper due 2023 lost about 1½ points to close at around 85 bid. The 7.7% notes due 2027 fell about 2¾ points to close at 73¾ bid.

Columbus, Ohio-based retailer L Brands’ 5¼% notes due 2028 rebounded, adding about ¾ point to close at around 85½ bid.

On Wednesday, the 5¼% notes lost about 1 point.

Ultra Petroleum downgraded

Meanwhile, Ultra Petroleum’s notes declined Thursday, traders said.

The 6 7/8% notes due 2022 shaved off 3 points to close at 58 bid. The 7 1/8% notes due 2025 fell about 1½ points to close at around 43 bid.

On Wednesday, the 6 7/8% notes soared 7½ points while the 7 1/8% notes lost 2½ points.

After announcing exchange agreements for $556.4 million of the 6 7/8% senior notes due 2022 and about $267.1 million of the 7 1/8% senior notes due 2025 on Wednesday, ratings agencies put the Houston-based independent oil and gas producer under increased scrutiny Thursday.

Fitch Ratings affirmed the long-term issuer default ratings. Standard & Poor’s lowered its issuer credit rating and affirmed a negative outlook after the close.

The company will issue new 9% cash/2% pay-in-kind senior secured second-lien notes due July 2024 and new warrants.

Houston-based peer Sanchez Energy’s bellwether tranche also moved lower in tandem with oil futures.

The 6 1/8% paper due 2023 lost about ¾ point to close at 53 bid.

At the end of the session, West Texas Intermediate crude oil futures moved down another $1.10 to $68.65 per barrel. North Sea Brent futures went below 80, falling 67 points to $79.38 per barrel.

Lafayette, La.-based offshore air services name PHI’s 5¼% notes due 2019 fell about ¼ point to close at 88½ bid.

The notes have been trading lower from a 92 context last Friday after the company announced that it would be terminating a cash tender offer for the $500 million outstanding of the 5¼% notes.

Away from oil, Overland Park, Kan.-based propane supplier FerrellGas’ notes were seen rising, continuing a trend since the company announced the completion of two acquisitions of longtime suppliers.

The 6¾% notes due 2022 added about ¼ point to close at around 89¾ bid. The 6¾% notes due 2023 rose about 1 point to close at around 88 bid.

iHeart up

iHeart notes rose in the Thursday session, market sources said.

The 6 7/8% notes due 2018 gained about 4½ points to close at 22¾ bid.

The San Antonio-based outdoor communications company reached a restructuring deal with some creditors that improved value for legacy note holders, according to a market source.

“That generated some activity today,” a trader said. “They looked stuck in the mud a few months ago.”

© 2015 Prospect News.
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