Neiman Marcus notes lower as creditor dispute continues; Ultra Petroleum issues fall on downgrade

By James McCandless

San Antonio, Jan. 3 – Thursday activity in the distressed market saw an uptick as the overall market continues a negative trend.

Neiman Marcus Group, Inc.’s notes moved lower as its court dispute with creditors over a private equity transfer continues.

Other retailers, namely PetSmart, Inc. and L Brands, Inc.’s issues were mixed.

In the energy space, Ultra Petroleum Corp.’s paper also fell after receiving a ratings downgrade after the close on Wednesday.

Sector peer Sanchez Energy Corp.’s notes followed the negative trend.

Meanwhile, in pharmaceuticals, Teva Pharmaceutical Industries Inc. and Bausch Health Cos. Inc.’s issues rose while Mallinckrodt plc’s paper declined.

Despite ties to negative news, Western Digital Corp.’s notes ended the session flat.

Neiman Marcus lower

Neiman Marcus’ notes ended Thursday lower, traders said.

The 8% notes due 2021 dropped ½ point to close at 41 bid.

On Wednesday, Marble Ridge, one of the Dallas-based luxury retailer’s largest creditors, filed a motion in court to have the company’s countersuit dismissed in an ongoing legal fight over the private equity transfer of e-commerce segment MyTheresa.

Recent restructuring negotiations were halted as disagreements arose over the transfer.

The creditor originally filed a lawsuit against the company in early December, claiming the transfer was fraudulent.

Shortly after, the company countersued for damages for “a series of false public statements accusing the company of being in default under its agreements with its debtholders.”

Elsewhere in the retail space, PetSmart’s issues were mixed.

The 8 7/8% notes due 2025 lost ½ point to close at 59¾ bid. The 5 7/8% notes due 2025, while moving as low as 72½ bid during Thursday trading, held level at 74 bid, according to Trace data.

The Phoenix-based pet supplies chain is in the middle of a similar dispute with its creditors over website Chewy.com.

Both parties are seeking internal documents from the opposite as they try to come to a resolution in court.

Columbus, Ohio-based retailer L Brands’ paper was also mixed.

The 6 7/8% paper due 2035 fell ¾ point to close at 83¾ bid. The 5¼% paper due 2028, rising as high as 87½ bid during the day, ended flat at 85¼ bid.

Ultra Petroleum down

In oil and gas, Ultra Petroleum’s notes were trending negative, market sources said.

The 6 7/8% notes due 2022 shaved off 1¼ points to close at 35¼ bid. The 7 1/8% notes due 2025 lost 2½ points to close at 28½ bid.

After the close Wednesday, S&P Global Ratings downgraded the Houston-based independent oil and gas producer, lowering its issuer credit rating and unsecured note ratings.

Despite another rise in oil futures, frequently traded Houston-based peer Sanchez Energy’s issues fell.

The 6 1/8% notes due 2023 dropped 1 point to close at 17½ bid.

At the Thursday close, West Texas Intermediate crude oil futures for Februart delivery picked up 55 cents, ending at $47.09 par barrel.

North Sea Brent crude futures ended the session at $55.95 after rising by $1.04.

“I think we’re going to be stuck in the 40s in the short-term,” a trader said. “I don’t see any catalysts coming that could push it all the way back right now.”

Teva improves

Leading in the pharmaceutical space, Teva’s paper gained, traders said.

The 3.15% paper due 2026 picked up 1 point to close at 78¾ bid. The 2.8% paper due 2023 added ½ point to close at 86¼ bid.

The Petach Tikva, Israel-based generic drug maker announced on Wednesday that it had settled a patent dispute with competitor Amgen over a generic version of an Amgen drug.

Teva agreed to hold off on selling the drug until 2021 and will make an undisclosed payment to Amgen.

Meanwhile, Laval, Canada-based peer Bausch’s 6 1/8% notes due 2025 rose 2 points to close at 90 bid.

Staines-Upon-Thames, U.K. based drug producer Mallinckrodt’s 4¾% notes due 2023 fell 1¼ points to close at 67¼ bid.

“More people are starting to see the opportunities in health care as other sectors are stumbling,” a trader said.

Western Digital holds

Despite the negativity spreading from its ties to Apple, Western Digital’s paper ended level, market sources said.

The 4¾% paper due 2026, despite moving higher towards 89½ bid, settled back down at 87¼ bid.

The San Jose, Calif.-based data storage name and Apple supplier saw heavier trading after Apple announced that its first-quarter revenues would be lower than expected due to less-than-expected sales of the iPhone.

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