Bed Bath & Beyond trades mixed after earnings; PG&E better amid restructuring spat

By James McCandless

San Antonio, Oct. 3 – The distressed debt space saw more volume given to newsmakers with an undercurrent of energy tranches.

Bed Bath & Beyond Inc.’s notes varied in direction after releasing a lukewarm second-quarter earnings report.

Rite Aid Corp.’s issues improved following the company’s announcement of a new chief operating officer.

In utilities, PG&E Corp.’s paper saw a better day amid an increasingly contentious dispute between creditors and equity holders.

Manufacturer United States Steel Corp.’s notes moved in different directions in the aftermath of its acquisition news.

Oil futures diverged along with California Resources Corp.’s and Valaris plc’s notes as Chesapeake Energy Corp.’s paper rose.

Pharma names Teva Pharmaceutical Industries Ltd.’s and Mallinckrodt plc’s notes saw mixed trading.

Bed Bath varies

Bed Bath & Beyond’s long-term notes varied in direction on Thursday, traders said.

The 5.165% senior notes due 2044 added 1 point to close at 68½ bid. The 4.915% senior notes due 2034 lost ½ point to close at 72½ bid.

After the close on Wednesday, the Union, N.J.-based retailer released its second-quarter earnings report.

The company reported a profit of 34 cents per share, better than the 26 cents per share that analysts had expected.

Revenues were underwhelming at $2.72 billion.

The company also said that by the end of the fiscal year it would close 60 stores after originally marking 40 for closure in its previous report.

Interim chief executive officer Mary Winston said that a permanent CEO will be named soon after making substantial progress in its search.

“Retail has taken a back seat to a few other sectors in distressed but it’s still a target,” a trader said. “It’s all a mixed bag.”

Rite Aid up

Meanwhile, Rite Aid’s notes were seen improving, market sources said.

The 6 1/8% senior notes due 2023 rose ¾ point to close at 79¾ bid.

The Camp Hill, Pa.-based drug store chain announced early Wednesday that it had named health care industry veteran Jim Peters as its chief operating officer.

The company recently released its second-quarter earnings, outpacing analyst predictions with a 12 cents per share profit.

Revenues missed the mark at $5.37 billion.

The name has struggled to perform in an increasingly tightening sector, facing more competition and a general downturn in the retail sector.

PG&E better

In the utilities space, PG&E’s paper saw a better day, traders said.

The 6.05% notes due 2034 improved by 1¼ points to close at 113½ bid.

In recent days, the San Francisco-based bankrupt electric utility has found itself drawn deeper into a dispute between it, shareholders and creditors over its potential restructuring plan.

On Wednesday, a group including wildfire victims, creditors, state regulators and others said that it supports the expiration of the company’s exclusive right to propose a restructuring plan.

Arguing that allowing for competition would mean a better outcome for wildfire victims, the group seeks to raise the company’s proposed $8.4 billion cap on victim payouts.

A decision on whether to rescind the company’s exclusivity will be decided in a court hearing later this month.

U.S. Steel active

Manufacturing name U.S. Steel’s notes moved in different directions, market sources said.

The 6¼% senior notes due 2026 shaved off ¼ point to close at 81¼ bid. The 6 7/8% senior notes due 2025 picked up ½ point to close at 88 bid.

The Pittsburgh-based steel manufacturer’s structure has come under pressure in the last few trading days after announcing that it had purchased a 49.9% stake in competitor Big River Steel, with a four-year option to purchase the rest.

The move triggered a downgrade from S&P Global Ratings, which viewed the debt-financed transaction as a potential factor that could result in a downgrade if market conditions worsened.

Oil futures diverge

A divergence in oil futures was matched by heavily-traded distressed energy names, trader said.

West Texas Intermediate crude oil futures for November delivery shed 19 cents to settle Thursday at $52.45 per barrel.

North Sea Brent crude oil futures for December delivery closed at $57.71 per barrel.

Los Angeles-based independent oil and gas producer California Resources’ issues saw diverging in trading.

The 6% senior notes due 2024 dropped 1 point to close at 34 bid. The 8% senior secured notes due 2022 added ½ point to close at 47½ bid.

London-based contract driller Valaris’ paper moved similarly.

The 5.2% senior notes due 2025 gained 1½ points to close at 51 bid. The 7¾% senior paper due 2026 fell ½ point to close at 51 bid.

Oklahoma City-based oil and gas producer Chesapeake Energy’s notes rose.

The 8% senior notes due 2025 garnered ½ point to close at 71¾ bid. The 8% senior notes due 2027 added ¾ point to close at 69 bid.

Teva, Mallinckrodt mixed

Pharma name Teva’s issues were mixed by the close, market sources said.

The 2.2% senior notes due 2021 held level at 91¾ bid. The 2.8% senior notes due 2023 jumped up 1¼ points to close at 81¼ bid.

The Petach Tikva, Israel-based generic drug maker has seen continued distressed trading as the industry searches for solutions to legal issues surrounding the opioid epidemic.

News broke on Wednesday that Johnson & Johnson had reached a $20.4 million settlement with Cuyahoga and Summit counties in Ohio as other legal battles loom.

Reportedly, a group of pharmaceutical companies is exploring blanket settlements modeled from Purdue Pharma’s, with some wanting to go as far as joining the settlement itself.

Staines-upon-Thames, England-based peer Mallinckrodt’s paper was also mixed.

The 5¾% senior notes due 2022 improved by 1¼ points to close at 33¼ bid. The 4 7/8% senior notes due 2020 closed level at 61¼ bid.

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