California Resources, EP Energy ‘beat up’ for second session with falling oil; PetSmart leaking

By Colin Hanner

Chicago, June 21 – Distressed exploration and production companies continued to be the name du jour in the distressed debt market on Wednesday, a market source said, as Brent crude joined West Texas Intermediate crude in the bear market.

“With what oil was doing, [distressed] oil names were getting beat up,” a market source said.

Although data from the Energy Information Agency pointed to lower inventories last week, investor worry from the previous session carried over into Wednesday. California Resources Corp. and EP Energy Corp. were among names to drop by several points.

Pet retailer PetSmart Inc. continued to be “under pressure,” a market source said, with its recent deals trending down further toward distressed territory. The store’s grouping into the traditional retail space has bondholders worried about the future of the pet retailer’s future, a market source said.

Intelsat Jackson Holdings SA was “much quieter” than the previous sessions, a market source said, though what volume it did see was lower on the session.

E&P repeats losses

Data supporting an uptick in oil was not enough to quell oil market worries on Wednesday, with West Texas Intermediate crude falling more than 2 percent to below $43 a barrel.

Brent crude saw a larger loss, enough to put it in a bear market, which West Texas Intermediate did on Tuesday.

Among the casualties of the session, California Resources’ 8% notes due 2022 traded down as much as 4 points to 57½, a trader said. A market source quoted the same notes down 2 points to a 59 bid, 60 offer.

EP Energy Corp.’s 8% notes due 2025 mirrored Tuesday’s losses and were down another 3 points to 69.

Denbury Resources Corp.’s 6 3/8% notes due 2021 were down 3 points to 62½.

Offshore drilling contractor Noble Holdings International Ltd.’s 7¾% notes due 2024 were down 3½ points to 76½.

On Wednesday, the EIA reported that U.S. commercial grade crude oil inventories decreased by 2.5 million barrels – though total inventories are still in the “upper half of the average range for this time of year,” the agency said – and total gasoline inventories decreased by nearly 600,000 barrels last week.

Elsewhere in energy, recently bankrupt GenOn Energy Inc.’s 9½% notes due 2018 were down ¼ point to 62¼, a market source said.

PetSmart leaks

Two of PetSmart’s most recent issues were lower on the session, a market source said.

The two issues – 5 7/8% notes and 8 7/8% notes due 2024 – priced in late May, but have been leaking from their par pricing ever since.

On the day, the 8 7/8% notes due 2024 were down about 1 point to a 92 3/8 bid, 93 1/8 offer, a market source said.

The 5 7/8% notes due 2024 were down 1½ points to 95 5/8.

“The deal has been kind of a pig since it came [to market],” a market source said. “I think a lot of people are concerned about leverage and headwinds that the space is facing. For all intents and purposes, it is a retailer.”

While apparel retailers have been catching the bulk of attention in the high-yield and distressed arena, traditional brick-and-mortar retailers in other sectors have also come under fire with the aggressive push of e-commerce.

For instance, last week’s acquisition of Whole Foods Inc. by Amazon.com Inc. caused storefront grocers to falter. Last month, Petsmart acquired online pet retailer Chewy.com Inc. for more than $3 billion to capture some of the online pet supply space.

Intelsat quiets

The previous two sessions had seen residual trading from Intelsat Jackson’s new $1.5 billion of eight-year senior notes, though the steam seemed to be running out on Wednesday.

Intelsat Jackson’s 7¼% notes due 2020 were down 7/8 point to 93 3/8 with more than $4 million exchanging hands.

Similarly-held 7½% notes due 2021 were down ¼ point to 92 on similar volume.

And the 5½% notes due 2023 were down 1/8 point to 82 7/8.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.