PetSmart mixed at top of retail space; Alta Mesa gains as financial alternatives sought

By James McCandless

San Antonio, April 9 – The distressed space saw attention continued to be focused on retail and energy names on Tuesday.

PetSmart, Inc.’s notes were mixed as the market waited for the company’s earnings numbers to trickle out.

Sector peer L Brands, Inc.’s issues were similarly mixed after being affirmed as negative by a ratings agency.

In energy, Alta Mesa Resources, Inc.’s paper gained a day after it announced a review of financial alternatives.

Oil futures received a haircut, giving way to mixed activity for California Resources Corp.’s and Ensco plc’s notes as EP Energy Corp.’s issues rose.

Elsewhere, in telecom, Windstream Holdings, Inc.’s paper improved as the company sues a competitor over alleged false advertising.

Intelsat SA, another telecom name, saw its notes trend lower.

Hexion Inc.’s issues traded lower a day after commencing its post-bankruptcy financing.

PetSmart mixed

On Tuesday, PetSmart’s notes finished the session mixed, traders said.

The 8 7/8% notes due 2025 picked up ¼ point to close at 80½ bid. The 5 7/8% notes due 2025 lost ½ point to close at 88 bid.

Earnings for the privately held Phoenix-based pet supplies retailer are expected to trickle out this week.

“We’ll probably get a clearer picture as the week progresses,” a trader said.

The company is still wrangling with creditors over the 2018 private equity transfer of a large portion of e-commerce segment Chewy.com.

Plaintiffs in the case allege that the name was in default at the time of the transfer.

Large holder Capital Research looked to add itself as a plaintiff last week.

L Brands mixed

Elsewhere in the sector, L Brands’ issues were similarly mixed, market sources said.

The 6¾% notes due 2036 shaved off ¼ point to close at 85½ bid. The 5¼% notes due 2028, while moving up to 90 bid during the day, ended the session level at 89½ bid, according to Trace data.

On Tuesday afternoon, Moody’s Investors Service affirmed all of its ratings for the Columbus, Ohio-based retailer and changed its outlook to negative from stable.

The change was attributed to the company’s worsening margins and shrinking sales at its Victoria’s Secret segment over the last 10 quarters, though the agency acknowledged a strong cash flow.

Alta Mesa up

Meanwhile, in oil and gas, Alta Mesa’s paper was on the rise, traders said.

The 7 7/8% paper due 2024 rose 2 points to close at 34 bid.

After the market close on Monday, the Houston-based independent oil and gas producer announced that it has drawn from the remaining capacity of its $370 million senior secured revolving credit facility.

The company committed the $86 million draw for general corporate purposes.

Last week, the company informed the Securities and Exchange Commission that it would have to delay the filing of its annual report, in which it expects to report material weakness in its internal control of its financial reporting and a $2 billion net loss.

Oil names mixed

Distressed energy tranches were mixed as oil futures got a haircut, market sources said.

Los Angeles-based producer California Resources’ notes moved little for the day.

The 6% notes due 2024 ended the day flat at 72½ bid. The 8% notes due 2022 added ½ point to close at 83 bid.

London-based contract driller Ensco’s issues were mixed.

The 7.2% notes due 2027, while reaching 84¾ bid during the day, ended level at 84 bid. The 7¾% notes due 2026 picked up 2½ points to close at 89¼ bid.

Houston-based producer EP Energy’s paper rose.

The 8% paper due 2024 improved by 1 point to close at 58½ bid. The 7¾% paper due 2026 edged up ¼ point to close at 84¾ bid.

West Texas Intermediate crude oil futures for May delivery declined by 42 cents on Monday to close at $63.98 per barrel.

North Sea Brent crude oil futures for June delivery ended at $70.61 per barrel after a 49-cent loss.

Windstream up, Intelsat down

In the telecom space, Windstream’s notes were on an upward trend, traders said.

The 8¾% notes due 2024 tacked on 1¼ points to close at 27 bid. The 9% notes due 2025 added 2½ points to close at 72½ bid.

The Little Rock, Ark.-based bankrupt rural communications name filed suit against competitor Charter Communications on Friday, alleging that the company’s Spectrum brand contacted customers and mislead them about the consequences of its bankruptcy on its ability to provide services.

The company further stated that the alleged actions have damaged its reputation and its ability to operate as a going concern post-bankruptcy.

Elsewhere in the sector, Luxembourg-based satellite operator Intelsat’s issues were pushed lower.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 gave back ¼ point to close at 90½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 moved down ½ point to close at 76½ bid.

Hexion off

In chemicals, Hexion’s paper dipped in the Tuesday session, market sources said.

The 6 5/8% paper due 2020 lost ½ point to close at 80¾ bid. The 10% paper due 2020 dropped 3½ points to close at 78 bid.

The Columbus, Ohio-based chemicals producer commenced an 18-month debtor-in-possession term loan on Monday to the tune of $350 million.

The company filed for Chapter 11 bankruptcy last week.

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